Thermal coal imports pick up in most Asian buyers as prices moderate: Russell
Repeats earlier item, no change to text. (The opinions expressed here are those of the author, a columnist for Reuters.
By Clyde Russell
LAUNCESTON, Australia, March 30 (Reuters) -Cheaper prices and rising energy demand are boosting seaborne imports of thermal coal among most, but not all, of Asia's major buyers of the fuel used to generate power.
The world's two biggest coal producers and importers, China and India, are leading the charge, with March imports expected to hit multi-month highs.
China's imports of seaborne thermal coal are forecast to reach 26.82 million tonnes in March, according to data compiled by commodity analysts Kpler.
This would be the highest monthly total in Kpler records going back to January 2017, and would be 41% above February's 19.96 million tonnes and 70% more than the 15.81 million tonnes from March 2022.
India's imports of thermal coal are expected to reach 12.52 million tonnes in March, the most since August last year and up 21% from February's 10.35 million.
The common thread for China and India is relatively strong economic growth spurring demand for electricity, as China reopens after ending its zero-COVID policy and India's services and infrastructure sectors remain robust.
Outside of the two major importers there are also signs of strength with Vietnam expected to lift March imports to 1.68 million tonnes, the most since August last year, while the Philippines is forecast to have arrival of 3.3 million tonnes, the highest since June 2022.
The major exceptions to the strong imports of thermal coal in Asia are Pakistan and Japan, although the reasons are vastly different.
Pakistan's March imports are expected to be just 142,441 tonnes, according to Kpler.
While this is up from February's 104,046 tonnes, it's worth noting that the last four months have been the weakest in Kpler data going back to January 2017, and that Pakistan regularly imported between 1.0 million and 1.5 million tonnes a month over much of the past six years.
The South Asian nation's economy is struggling to pay for energy imports and an escalating political crisis is raising concerns over its stability.
Japan's imports of thermal coal are expected at 10.16 million tonnes in March, the lowest since November.
However, this reflects the end of the northern winter heating season, with Japan's imports typically peaking over the winter and summer demand peaks and declining in the intervening shoulder periods.
Japan also tends to be less susceptible to price changes, as its utilities prize security of supply over costs when it comes to securing longer-term contracts.
PRICE HELPS VOLUMES
However, lower prices will have helped boost demand among some Asian importers, with India's recent uptick a case in point.
While Indian utilities that have been told by the government to operate their coal-fired generators to ensure sufficient electricity, the recent decline in some of the major seaborne thermal coal grades will have helped with the economics of complying with the official directive.
India's main supplier of thermal coal is Indonesia, the world's biggest exporter of this type of coal.
Indonesian coal with an energy content of 4,200 kilocalories per kg (kcal/kg) IDIDX42GRW1=ARG, as assessed by commodity price reporting agency Argus, ended at $74.55 a tonne in the week to March 24.
While this is up from the 13-month low of $68.18 a tonne in the week to Feb. 17, the price is still well below the winter peak of $94.28 from late December and also 38% down from the 2022 high of $120.86, reached in March in the wake of Russia's invasion of Ukraine.
India sources most of its coking coal used to make steel from Australia, but it also buys some thermal coal from the world's second-largest exporter.
The most popular grade of Australian thermal coal in India is the 5,500 kcal/kg API5DXWKY=ARG at Newcastle Port, which, similar to the lower-quality Indonesian rival, has bounced off its recent low but remains substantially cheaper than it was for much of the year since Russia's invasion of Ukraine.
The grade ended last week at $122.71 a tonne, up from the low this year of $117.72, but 57% lower than the record high of $284.20 hit in March last year.
The recent uptick in the prices of Indonesian and Australian thermal coal is likely a reflection of higher Indian and Chinese demand, but the gains remain modest and are unlikely to dent imports in coming months.
The opinions expressed here are those of the author, a columnist for Reuters.
GRAPHIC-Seaborne thermal coal imports by China, Japan, India:https://tmsnrt.rs/3G2Cm0M
Editing by Robert Birsel
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
