China’s Power Generators Increase Coal Import Levels

BRISBANE, Australia - May 22, 2013 - PRLog -- The recent increase in coal imports into China comes at a time when the poor market outlook has cut traders’ profits along with their business activity.

Huaneng, the country’s largest power group, sourced 3.19mt of imports in the first quarter, surging 214.7% from the same period of last year. Datang received 1.60mt, up 78.4%, while Guangdong-based Yudean purchased 1.30mt, an increase of 87.2%, according to statistics.

By contrast, traditional coal traders saw business becoming increasingly difficult, which is reflected by slower business growth in Q1.

Guangdong-based Yatai imported 290mt in the period, climbing just 34.4%, and narrowing from 2010’s growth of 71.8%. Guangzhou Dayou, another major player, received 1.92mt, growing 36.7%, versus 2011’s rate of 50.8%.

It’s believed that the decline in domestic prices has led to $0.50/t or less in profits for the traders, in contrast to margins of a few dollars in recent years.

As an example, Guodian recently told traders that it is interested in taking cargoes at $85.50/t CFR Shanghai, basis 5,500kc NAR.

Strong purchases by power groups are predicted to contribute to the steady increase in China’s overall imports in the coming months, after some 28.84mt was imported in April, up from 26.15mt in March and 23.3mt in February.

This is also backed by more participants coming into the market, according to sources. Traders who were importing iron ore and coking coal previously have shown interest in steam coal.

Tianjin-based General Nice, a former coke and coking coal trader, has imported 1.67mt in Q1, up 314% year-on-year, with a large portion of the amount being steam coal.

Chinese traders project that prices may see a reasonable drop during next month’s Coaltrans conference in Bali, although it’s thought that major Indonesian producers have almost sold out their whole-year production to international trading groups.

More information can be found in the McCloskey China Coal Report which presents monthly updates on both the producer and consumer sides of the Chinese coal market.  With information on trade, transport and policy updates, the McCloskey China Coal Report provides comprehensive coverage for anyone dealing with the Chinese coal market.

For more information or for a free trial subscription, please contact epi.coalinfo@ihs.com, call +61 7 3020 4000 or visit http://www.coalportal.com/.