Another informative article to help build and support the case...

Another informative article to help build and support the case for the great future of CPL. Good luck to Holders


China set to become largest importer of thermal coal
By Javier Blas in London and Leslie Hook in Hong Kong

Published: June 23 2010 19:13 | Last updated: June 23 2010 19:13
China is set to overtake Japan as the worlds largest importer of thermal coal as soon as this year, only three years after China became a net importer of the mineral used to fire power stations, according to an emerging industry consensus.

The speed at which Chinese coal imports are growing is surprising mining companies, traders and policymakers, who had previously not expected China to overtake Japan before 2015
Traders and policymakers said they expected Chinas thermal coal net imports to hit 105m-115m tonnes this year, level with or above Japan, which is expected to buy about 110m tonnes. China was a net exporter of coal until 2007.

Fatih Birol, chief economist at the International Energy Agency, said: Chinas imports of thermal coal could exceed Japans this year for the first time.

The coal mining and trading industry largely takes the same view. Some traders believe China and Japan will be neck and neck this year, while others say Beijing could overtake Tokyo, based on the pace of imports so far this year.

China had net imports of 47.5m tonnes between January and May, up more than 120 per cent from 2009. If the pace is sustained, its net imports would hit 114m tonnes by December. But traders expect a slight slowdown.

The closely watched Australia Bureau of Agriculture and Resource Economics this week put Chinas net thermal coal imports this year at 98m tonnes, still below Japan, but above South Korea, until now the second-largest importer.

Coal prices in the Australian port of Newcastle, the benchmark in Asia, have risen again to $100 a tonne on the back of buying by China, India and other countries. In Europe, coal prices in Rotterdam for delivery in three months the benchmark rose last week to $96 a tonne, the highest since November 2008.

Beijings appetite for imported thermal coal bodes well for mining companies such as Xstrata, the worlds largest coal exporter, PT Bumi Resources of Indonesia, Anglo American or US-based Peabody Energy. Commodities traders such as Glencore and Hong Kong-based Noble are particularly well positioned to cash in, executives said.

Greg Boyce, chief executive of Peabody, told investors recently that the world economy was at the early stages of a long-term supercycle for coal.

Policymakers are concerned about the impact of rising buying on global energy prices and carbon emissions. Mr Birol said Chinas buying would underpin global coal prices, adding: The increase in coal prices will increase electricity prices and increase the cost of manufacturing.

The surge in coal imports comes on the back of rising power demand. China relies on coal to produce 80 per cent of its electricity, double the worlds average, according to IEA. The western countries energy watchdog forecast that China would add 500 gigawatts of new coal-fired electricity generation capacity between now and 2020, almost double Japans current total power generation capacity.

Yingxi Yu, commodities analyst at Barclays Capital Singapore, said that even though China was moving towards more renewable energies, coal will remain as a primary source of fuel for the foreseeable future, simply because of the stability of supply and the fact that China is pretty rich in coal resources.

China is already the worlds largest coal producer but domestic supplies cant meet the growing demand. Chinas efforts to consolidate small coal mines may be keeping a lid on Chinese domestic production, Ms Yu said.