ft thermal coal article

China?s commodities consumption is so voracious that when the country?s demand hits a fresh record the market barely takes notice any longer. Even so, Beijing?s recent record-breaking run in crude oil and thermal coal consumption merits attention.

The surge signals a bullish trend for energy commodities, even if the oil and coal markets remain worried about the short-term ups and downs of the Chinese economy.

Take oil first. The International Energy Agency, the rich countries? oil watchdog, estimates that Chinese oil demand moved above the 10m barrels a day level for the first time ever in November. The surge in November to 10.2m b/d was in part due to Beijing: it ordered power stations to shut down to meet emissions targets, prompting blackouts which forced companies to rely on diesel-fired power generators.

Oil consumption is likely to ease somewhat in early 2011 as Beijing lifts the restrictions, but the country will top the 10m b/d barrier once again later this year.

The IEA forecasts that China will consume on average 9.8m b/d this year, roughly double the 4.7m b/d of ten years ago. The consumption rate is staggering. China will consume this year the same amount of crude oil that the all the top buyers of Europe combined: France, Germany, the UK, Italy, Spain, the Netherlands and Belgium.

Oil is not the only are in which China broke records recently and hit key levels.

The country?s imports of thermal coal, used to fire power stations to produce electricity, surged for the first time above the key 100m tonnes in 2010, according to official data. The spike puts China as the second largest coal importer, behind Japan. Tokyo has not yet released official data for the whole year, but analysts and traders believe that Japan bought around 110m tonnes last year.

The surge in Chinese thermal coal is even more staggering that the spike in oil demand as the country was until only three years a net exporter of thermal coal.

The shift comes largely on the back of a clampdown on illegal and unsafe mining, which forced the closure of hundreds of small mines in Shanxi province, the key producing area. Besides, transport bottlenecks from the interior coal regions towards the coastal cities have pushed up local prices and prompted power stations to seek seaborne supplies. The spike in imports to 100m tonnes is a big U-turn from net exports of about 80m tonnes in 2005.

The energy market, so used to China never stopping consumption, may pay little attention nowadays to the country?s latest record in oil and thermal coal consumption. But 10m barrels a day of oil and 100m tonnes of thermal coal deserve its attention, particularly from those bears betting that energy commodities prices are about to drop. China demand is rising apace so bears may need to take cover.