PRLog - Oct. 15, 2012 - BRISBANE, Australia -- While there has been much angst about the absence of China from the thermal coal market in recent months, some industry participants are warning the real pain is only now about to start because China never really left the market.
Thermal Coal Price China 2012 | Supply | Demand | Import | Export | Q4 | News
“There has been all this talk about how China is out of the market, but the data shows this has been anything but the case,” a Singapore-based analyst told China Coal Report. “The fact is China has been buying huge amounts of thermal coal all year.
“However, you have to question how long China will keep taking imports at these levels. I don’t think it is at all the bullish scenario some producers had been hoping for as China emerges from the Golden Week national holiday and approaches its winter. There are stocks aplenty in China. They do not need to import coal, even at the incredibly low prices currently on offer.”
In August China accepted 12.77Mt of imported thermal coal, according to Chinese Customs Data. The figures represent a fall of just 1.09Mt month-on-month but a surprising increase of 2.62Mt year-on-year.
Year-to-date thermal imports at the end of August this year were 93.33Mt, up a staggering 38.67Mt on the first eight months of 2011. China’s total thermal coal imports for 2011 were 102.49Mt, according to Chinese Customs Data.
“The numbers we are seeing out of China for the last eight months are completely bizarre. They don’t make any sense,” an Asian-based trader told China Coal Report.
“Imports in Q4 logically should drop off but there is no sense in what has happened so far this year so they may not. Looking at it realistically, it was a full-on first half of the year for imports and you have to think it can’t be sustained, but with the market having been so devoid of logic this year, who knows what will happen.
“You would have to think we have hit the inflection point and imports will start to drop off. What happens now will be very interesting.”
The trader said it had become common knowledge in trading circles that more than a few end-users in China were encouraging some producers to bill them at $10/t above the sale price and were skimming that $10/t off the top for themselves.
“I believe it is these kickbacks and these kickbacks alone which are keeping imports flooding into China,” he said. “It really is the only way to make sense of what has been happening.
“China doesn’t need the imports, it has extremely healthy stockpiles and demand is lower than it has been for quite a long time because manufacturing is being scaled back and yet the imports have been flowing in.
“That’s why the power stations still have more than 20 days worth of coal. Usually at this time of year following Golden Week it’s down to about 10-14 days.”
More information can be found in the China Coal Report which presents weekly updates on both the producer and consumer sides of the Chinese coal market. With information on trade, transport and policy updates, the China Coal Report provides comprehensive coverage for anyone dealing with the Chinese coal market.
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