China Dec coal imports slip as COVID spike dampens industrial activity By Reuters

SINGAPORE (Reuters) -China’s coal imports slipped in December from a month earlier as industrial activity slowed following a surge in COVID-19 cases after Beijing’s sudden removal of stringent pandemic controls.

The world’s top coal consumer brought in 30.91 million tonnes of the fossil fuel last month, versus 32.31 million in November, data from the General Administration of Customs showed on Friday. That was largely flat compared with 30.95 million tonnes imported in December 2021.

Millions of people have fallen ill since China abandoned its zero-COVID strategy in early December, forcing factories to lower operations due to labour shortages and hitting coal demand for industrial use and power generation.

For 2022, coal shipments to China reached 293.2 million tonnes, down 9.2% from a year earlier, as the country boosted domestic coal production and urged utilities to sign term-deals with domestic miners to bolster its energy security.

China introduced a price cap on domestic thermal coal early last year aimed at lowering power generation costs at utilities and avoiding nationwide power shortages like those recorded in 2021.

The policy led to China’s domestic coal prices being much lower than supplies from abroad for many months as global coal prices soared over supply concerns after the Russia-Ukraine war.

Chinese coal imports are expected to pick up after the Lunar New Year in late January and early February as factories reopen and economic recovery prospects brighten the outlook for demand.

The resumption of Australian coal shipments should also lead to higher imports, analysts at ANZ bank said in a note.

China’s state planner has allowed three utilities and its top steelmaker to resume coal imports from Australia this month, after an unofficial ban on coal trade with Canberra in place since 2020.

But a central government directive for miners to crank up production and utilities to expand their term contracts with domestic miners – to 2.6 billion tonnes in 2023 from around 2 billion tonnes in 2022 – could keep a lid on coal imports.

China Coal Transportation and Distribution Association (CCTD) expects the country to bring in nearly 300 million tonnes of overseas coal in 2023, around the same level as 2022.