China's coking coal imports from Australia forecast sharply lower in 2023

China's coking coal imports from Australia will recover slowly in 2023 due to increasing supply from domestic miners, Russia and Mongolia, and amid high FOB Australia prices, industry sources said in a recent coking coal event.

Australian imports are expected to be lower than 5 million mt in 2023 in view of higher FOB Australia prices, said an international trader on the sidelines of the Singapore Coking Coal Conference held in the week to May 26.

Imports would mainly be decided by the profit margin. China domestic prices are unlikely to pick up in the short term amid increasing supply, he said.

It is a bit challenging to forecast a number for Chinese imports of Australian coal now as it depends on the direction of import prices, said another international trader.

S&P Global Commodity Insights' analysts expected May 31 that imports from Australia could be around 8 million mt in 2023. That figure is closer to estimates by some China-based analysts that in April had forecast Chinese purchases to be around 9 million mt.

Australia has been traditionally the largest coking coal supplier to China.

Before an unofficial ban on Australian coking coal, imports from the country accounted for 48.4% of China's total with a volume of 34.97 million mt in 2020, China customs data showed.

Seaborne met coal trade between Australian and China fell to zero during 2021 and 2022, S&P Global data showed.

However, some Australian coal volumes held at Chinese ports were released amid a rise in demand in China, sources said.

China's coking coal imports from Australia totaled 529,039 mt in the first four months of this year while more than 100,000 mt coal is in transit through end-May, customs and S&P Global data showed.

Meanwhile, imports from Mongolia and Russia accelerated in the first four months of 2023, reaching 15.34 million mt and 9.55 million mt, respectively, and comprising 49.5% and 30.8% of China's total met coal imports, respectively, customs data showed.

Imports from Mongolia and Russia have been higher than Australia since 2021, a trend which sources said is expected to continue in the months ahead.

China has continued to implement zero tariffs on coal imports until the end of this year and transportation barriers with Mongolia have almost been resolved, according to sources.

China removed import tariffs from May 1, 2022, on various coal grades as part of efforts to maintain adequate supplies amid the global disruption caused by the Russia-Ukraine war.

The country is expected to import about 41.8 million mt coal from Mongolia in 2023, up 63% from 2022, according to consultancy Everbright Futures.

Falling prices

Asia met coal premium low vol FOB prices have been higher than CFR China prices for most of 2023 so far, primarily pinned on reduced Australian coking coal imports, industry sources said at the conference.

CFR China prices saw a faster decline compared with Asia met coal PLV FOB prices since the start of this year due to rising supply and falling demand in the domestic market.

Asia met coal PLV FOB prices have remained stagnant amid thin demand, while CFR China prices were steady as buyers stayed on the sidelines amid a bearish market, sources said.

Platts assessed the benchmark Premium Low Vol Hard Coking Coal price flat on the day at $222/mt basis FOB Australia May 25, while the delivered price was also assessed flat on the day at $223/mt basis CFR China, S&P Global data showed.