China’s Guangxi approaches 80% of annual coal import quota
China’s Guangxi is approaching 80% of its annual coal import quota, leaving the region with about 6 million-7 million mt of quota for the rest of 2020, China’s Ministry of Industry and Information Technology told Chinese trading companies.
Sources said the import quota was aimed at supporting China’s mining industry and combatting lackluster demand for Chinese domestic coal.
Officials at MIIT, NDRC, Guangxi customs, Qinzhou and Fangcheng ports were not immediately available to comment.
“Chinese coal prices were down and trading volumes were largely below government expectation,” a southeastern China-based trader said.
The Import quota for Guangxi, located in Guangdong province, was around 24 million mt for 2020, unchanged from last year, sources said.
The remaining quota of 6 million-7 million mt was shared between coking and thermal coal for local end-users, market sources said.
The remaining quota will be distributed evenly over the rest of the year on a quarterly basis, sources in China said.
The quarterly quota will be distributed to various local end-users on a priority basis to maintain normal operations in the region, traders said.
“Larger local utilities will be given a larger portion of the quota while smaller local utilities, steel mills and other end-users in the general industries will get a smaller share,” a Singapore-based trader said.
China’s first-quarter thermal coal imports were up 28% year on year, according to data from the country’s General Administration of Customs.
Hence various coal-consuming regions in south and southeastern China would have a disproportionate amount of import quota remaining for the rest of the year, a southeastern China-based trader said.
Price competition between seaborne and domestic coal is expected to continue for mid to high-CV coal amid poor coal demand in China, market sources said.
Australian coal miners have lowered their expectation by $4/mt over this week due to overall bearish market for the high-ash 5,500 kcal/kg NAR Australian coal and competitively priced Chinese domestic coal, market sources said.
“If offers continue to persist above similar grades of Chinese coal, Australian coal will not be traded,” an Australia-based trader said.
Trades for 5,500 kcal/kg NAR grade of coal stabilized around Yuan 460-470/mt FOB Qinhuangdao ($65-$66.40/mt) while trades for 5,000 kcal/kg NAR stabilized at Yuan 400-410/mt FOB Qinhuangdao ($56.50-$57.95/mt).