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CHINA - BEIJING. China is expected to tighten coal import rules in the second half of 2020 to shore up its struggling domestic industry, after record arrivals in the first four months, just as demand tanked because of the coronavirus outbreak.
Imports could drop as much as a quarter in the second half from the corresponding 2019 period, analysts estimate, which is likely to boost pressure on major coal exporters, such as Australia, Indonesia and Russia, which are already battling weak demand because of the virus.
China's total thermal coal consumption may reach 1.9 billion tonnes from July through December, said Yu Zhai, a senior consultant at Wood Mackenzie.
Imports would account for about 80 million tonnes of that, or a quarter less than the 107 million in the corresponding 2019 period, Yu expects.
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James Stevenson, a senior director at IHS Markit, estimates China's full-year coal imports could fall to 275 million tonnes, with thermal coal dropping about 20 million tonnes, but with seaborne metallurgical coal arrivals seeing a slight pick-up.
China's National Coal Association expects demand to decline in the second quarter on the year, after a fall of 6.8% in the first quarter as the virus shut industrial plants.
Chinese coal miners have cranked out record output in 2020 in response to Beijing's call to ensure energy supplies, but the flood of imports, coupled with lower consumption, slashed profit margins by 30% in the first quarter.
"Chinese coal miners are going through a difficult time," said a coal association official who sought anonymity as he was not authorised to talk to media. "So coal-fired power plants have been encouraged to purchase more from domestic supplies."
