GlobalCoal China January coal imports up 12 pct on weak prices

Source: Reuters (17 Feb 2009)
SHANGHAI, Feb 17 - China imported 12 percent more coal in January than the previous month, as the country's power plants and steel mills capitalised on weak global prices.

The uptrend in imports is likely to continue in February as ever-slumping demand from traditionally large importers such as Japan and Korea leads to softer prices, allowing China to import more hydrocarbon, traders and analysts said. The world's largest coal producer and consumer imported 2.99 million tonnes of coal in January, up 12 percent from the previous month but down 29.5 percent from the year-earlier period, data from the General Administration of Customs showed on Tuesday.

The rise in Chinese imports came despite the week-long Lunar New Year holidays when industrial activity normally grinds to a halt.

For a graphic of China's coal imports and exports, click: https://customers.reuters.com/d/graphics/CN_CLIMPEX0209.jpg

China's power plants and traders have been taking advantage of cheaper prices in international markets, traders said. "Imports from Vietnam jumped in January after Vietnam loosened up its policy on coal exports, and now prices are less than half the highest point in the last year," said a Guangdong-based trader, adding that February imports are likely to climb too. Prices of Vietnamese coal at Guangzhou, the capital of the southern province of Guangdong, have fallen by nearly half from last summer's highs, according to the South China Coal Trade Center (www.huanancoal.com).

Australian coal, once too expensive, is now affordable, traders said.

Prices of power-station coal from Australia, a benchmark for Asia, are hovering above $80 per tonne on the globalCOAL Newcastle weekly index, down almost 50 percent from six months earlier. And prices of Chinese coal with a heating value of 5,500 kcal/kg have slid almost 46 percent to 650-670 yuan ($95 -$98) per tonne from six months earlier, the South China Coal Trade Center said.

"The weakness in demand in the traditional markets in the region determines that Indonesia, Vietnam and Australia have more than abundant supply of coal," said Henry Liu, an analyst at Macquarie Bank, adding that it was hard to say how long such a trend would last. Coal exports in January fell 18 percent on the month to 3.66 million tonnes, as the weakness in international market dampened the enthusiasm of exporters.

RISE IN COKING COAL IMPORTS

Imports of coking coal, a key raw material in steel-making, also rose in January, traders said. "Steel mills are returning to life now, and I've seen quite a lot of coking coal imports from Australia," said a second trader based in Guangdong. China's coking coal imports dropped to 337,131 tonnes in October 2008, before rising to 707,111 tonnes in December, according to the official customs data.

"Coking coal imports dropped to almost nothing at the end of last year, but now the small- and medium-sized steel mills are returning to production and demand for coking coal is up," said the first trader. Detailed January trade data including breakdown by coal types will be released later this month. ($1=6.835 yuan)