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China's coal imports drop to lowest in five months on import curbs

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China's coal imports drop to lowest in five months on import curbs

China's coal imports went down 8.3% year over year and 10% month on month to 19.46 million tonnes in July, Reuters reported Aug. 8, citing data from the General Administration of Customs.

Imports dropped to their lowest level in five months, due in large part to Beijing's efforts to tackle pollution, which prevented utilities from importing cheaper fuel from major exporters, including Australia, Indonesia and Russia, the report said.

Despite this, year-to-date imports were still up 18.2% year over year to 152.71 million tonnes as utilities scrambled for overseas coal when domestic capacity lagged.

Government measures to curb imports in recent months, compounded by a crackdown on domestic mining, have allowed coal prices to rally and are anticipated to linger until winter, the report said, citing Zhang Xiaojin, coal analyst with China Everbright Futures.

China's largest coal producer, Shenhua Group Corp. Ltd., recently suspended operations at two of its large open pit coal mines and is estimated to leave Huadian Energy Company Ltd with a coal shortfall of 3 million tonnes.

However, analysts at Commerzbank regard the latest rise in coal prices as "merely an intermezzo," as China unveiled its plan to launch about 200 million tonnes of net increased coal capacity this year on top of the 90 million tonnes already added during the first half of the year.