China's coal imports in September 2023 decreased by 6% compared to last year, reaching 43.37 million tons. This decline occurs while domestic inventories in China remain significantly high and supply from the key exporter, Indonesia, continues to be limited. While imports increased by 3% compared to last month, this figure represents a 5.7% decrease compared to last year.
Increase in Coal Prices in China
Analysts at Mysteel Global reported that the average price of coal imports in China in September reached its highest level since 2024. By the end of September, thermal coal prices in China had reached their highest level in three years. This price increase is due to reduced domestic production and decreased imports from the largest coal exporter, Indonesia.
In fact, coal prices in the world's largest coal consumer, which still relies on this fuel for nearly 50% of its electricity production, have increased by 24% since mid-July. This price increase has occurred due to limited supply and high demand.
Challenges in Domestic Production and Indonesian Exports
Coal production in China has experienced a downward trend this year compared to last year. Meanwhile, Indonesia's thermal coal exports have been affected by government production restrictions and political uncertainties in the mining and coal export sectors. The Indonesian government has reduced production quotas, and the El Niño weather phenomenon has led to decreased rainfall and lower river water levels, disrupting the movement of coal barges to export ports.
In response to these challenges, the Chinese government last month asked local miners to maintain stable production rates following a sudden increase in thermal coal prices. Chinese officials are working to increase coal production ahead of the winter season when this fuel is expected to play a larger role in stabilizing electricity production.
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