China’s April Australian coal arrivals jump, but import profit declines

SINGAPORE: China’s coal arrivals from Australia in April returned to a level last seen before Beijing’s unofficial ban in September 2020, as traders took advantage of cheaper Australian cargoes and strong demand for high-quality coal from Chinese end users.

China imported 3.89 million tonnes of Australian coal last month, comprising 3.72 million tonnes of thermal coal and 171,067 tonnes of coking coal, data from the General Administration of Customs showed on Saturday.

That was up 89.6% compared with March shipments, and was not far off the 4.47 million tonnes in September 2020.

China implemented an unofficial ban on Australian coal imports around September 2020, causing dozens vessels to linger around Chinese ports for months. Some cargoes were eventually allowed to pass Chinese customs in late 2021, leading to a sharp increase of 5.3 million tonnes imports in November 2022.

Chinese traders have been eager to place orders for spot thermal coal from Australia since the ban was lifted in January amid strong demand from Chinese utilities and industrial users.

China’s April coal imports drop on high stocks, weak demand

Utilities in China signed long-term purchase contracts with domestic coal miners whose supplies are mostly lower quality.

But Chinese buyers are reluctant to lock in contracts with Australian miners given concerns that coal prices will fall. The price of Australian thermal coal with an energy content of 5,500 kilocalories (kcal) fell to $117 a tonne on the free-on-board (FOB) basis this week, down from $127 a tonne in February.

Australian coal is now about 36 yuan a tonne more expensive than domestic coal in southern Chinese ports.

The narrowing price differentials also capped coal imports from Indonesia and Russia. Customs data on Saturday showed Indonesian coal arrivals last month were 21 million tonnes, down 4.5% from March but up 31.7% from the same period last year.

April imports from Russia were 8.1 million tonnes, down 8.4% from the previous month and jumping by 107.6% from 2022 level.

A report from the China Coal Transportation and Distribution Association this week, citing market participants, said Chinese buyers’ enthusiasm for Russian and Australian coal is cooling because of high domestic inventory and downward price pressures.

Mongolian coal arrivals in April were 5.43 million tonnes, up from 4.63 million tonnes in March.