In the dynamic global energy market, the rise in imports of seaborne thermal coal in Asia last December, led by China, had a noticeable impact. Although China's imports have increased, coal prices remain stable, influenced by strong exports from Indonesia and Australia. This analysis examines the factors driving the coal market, focusing on supply, demand, and pricing trends.
Increasing China's imports of thermal coal
China's demand for imported thermal coal peaked in December, with it importing a record 32.08 million tons. This rise was driven by increased coal-fired power generation, driven by a decline in hydropower production and increased demand for electricity. Despite record domestic coal production, China's dependence on affordable Indonesian and Australian coal remains high. China's coal production rose by 2.9% in the first eleven months of 2023, reaching 4.24 billion tons.
Indonesian and Australian coal price dynamics
The affordability of Indonesian and Australian coal has greatly impacted China's imports. Indonesian coal, which has an energy capacity of 4,200 kcal/kg, saw the price fall to $57.82 per metric ton, a two-month low and 36% lower than the start of the previous year. Australian coal, rated at 5,500 kcal/kg, fell to $93.23 per tonne, hitting a five-week low and a 30.1% decline from the same period in 2023.
Indonesia's dominance in coal exports
December saw Indonesian thermal coal exports reach their highest level of 48.05 million tons since March. China was the main importer, receiving 20.99 million tons, the most since March, highlighting the role of international trade in energy supplies.
China's demand for imported thermal coal greatly affects the global market, with Indonesia and Australia being major suppliers. Despite competitive prices and rising imports, the coal market shows resilience and adaptability in a changing energy landscape. This analysis provides insight into the current and future state of coal supply to those working in the coal market.
