China may cut net coal imports

0 CommentsPrint E-mail Shanghai Daily via agencies, April 13, 2011
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China, the world's biggest coal producer and consumer, may cut net coal imports this year because of higher global prices, said an official at the National Energy Administration in Beijing Tuesday.

"China's imports depend on external prices, and prices aren't very favorable now," Xia Xing, director of planning at the NEA's coal department.

Coal prices at Newcastle, an Asian benchmark, have surged as bad weather crimped output in Australia, Colombia and Indonesia. Cargoes from New South Wales port to South China are now at a premium of more than US$10 a ton to shipments from the northern Chinese port of Qinhuangdao, said Huang Teng, general manager at Beijing LT Consultant Ltd, a coal consultant.

"There are relatively fewer purchases these days as global coal resources are more expensive than domestic grades," Huang said by phone from Beijing.

The price of power-station coal with an energy value of 6,700 kilocalories per kilogram at Newcastle rose 25 percent to US$123.30 a ton in the week ended April 8, compared with a year earlier. That's over the 13 percent gain in the price of coal with an energy value of 5,500 kilocalories per kilogram at Qinhuangdao, which ships half of China's seaborne coal.

Xstrata Plc, the world's largest exporter of thermal coal, BHP Billiton Ltd and Rio Tinto Group are among miners that ship coal through Newcastle.

China bought more coal than it exported for the first time in 2009 when global prices were lower than the cost of domestic grades. Net coal imports, or overseas purchases minus exports, rose to a record 146 million tons last year from 103 million tons in 2009, according to customs data.

"Our estimate suggests the current quality-adjusted spread between import coal and domestic coal delivered to southern China is US$19 a ton," said Andrew Driscoll, Hong Kong-based head of resources research at CLSA Asia-Pacific Markets.

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