context: The coal price surge last month may be a driver for local customs to loosen import controls, but import volumes could still fall short of expectations, due to an insufficient supply, rising global demand, and the limited time frame for exempted imports.
Starting in June, Jiangsu, Zhejiang and Fujian customs relaxed clearance restrictions on imported coal. Imports that arrive before end June can be exempt from annual quotas. Power plants will be keen to increase purchases, to be better prepared for the summer peak demand and request larger quotas for 2022. But the import quota for 2022 is rumoured to have been approved based on current actual import volumes.
The actual increase in imports, however, may be lower than expected, because
- imports are insufficient
- Australian coal imports are still restricted
- continuous rainfall after Ramadan in Indonesia affected production there
- new waves of pandemic extend inspection and quarantine times
- demand in other countries is surging
- the coal demand in Japan, South Korea and Taiwan skyrocketed in recent weeks; in particular, Taiwan’s two power outages have forced it to increase coal production and purchases
- Indonesia is urging its own mining companies to prioritise domestic supply
- few new import orders can arrive before end June
- the trade process for Indonesian coal generally takes a month if supply is sufficient
- orders from Russia have already been postponed until August, while June deliveries are limited
Rising global demand may further boost coal prices, notes Yimei Research Institute.
From January to May 2021, 111 million tonnes of coal were imported, down 25.2 percent y-o-y. It is estimated that the monthly import volume from June to July will be between 23 and 27 million tonnes, still lower than in previous years.