An aerial view of the machinery at the coal terminal of Huanghua port, in Hebei province, China February 1, 2023.

Wedoany.com Report-Jan 17, China, the world's biggest coal consumer, extended its lead in imports over No. 2 buyer India last year to the widest since at least 2013, customs data shows, cementing its hold on global coal markets and helping to curb a slide in prices.

Global thermal coal prices have retreated from record highs hit after Russia's 2022 invasion of Ukraine, but are 50% higher than the average during the 2017-19 period, according to the International Energy Agency (IEA).

"China's appetite is causing prices to remain in the current range. If not, prices will really go down," Ramli Ahmad, president director at Indonesian miner Ombilin Energi, told Reuters.

Purchases by the Asian neighbours together account for over half of the global coal trade and the burgeoning gap reflects the increasingly outsized role played by China on prices, which are currently languishing at multi-week lows

Chinese coal imports hit a record 542.7 million metric tons in 2024, customs data showed, more than double the 250.2 million tons imported by India, expanding what had been a narrowing gap in the four years before the pandemic, when China's lead averaged 26%, customs and shipping data showed.

Purchases by China this year translated to a record 41% of global imports, said Toby Hassall, research lead for coal markets at LSEG.

While the IEA and information provider Argus expect Chinese coal imports to shrink in the near future, the IEA warned that "Chinese imports have repeatedly come in higher than expected in recent years".

Argus said it expects relaxations in stock building requirements for Chinese power plants and coal's decreasing share in power generation to reduce imports of the polluting fuel in 2025, but said volumes would still be close to 2024 levels due to steady demand from industries.

CHINA VERSUS INDIA

Chinese buyers showed increased preference for foreign coal last year due to discounts to domestic prices, while India's coal production is more competitively priced due to low production costs, industry players said.

Both China and India have sought to boost production in order to lower import bills, but frequent mine inspections in China have slowed output growth in the country.

Indian imports of thermal coal - a power generation fuel - fell about 3% last year, while in China they rose 13% in the first 11 months of 2024.

Coking coal imports by India grew by 4.7% in 2024, according to consultancy Bigmint, while Chinese imports of the fuel used in steelmaking rose 23% in the 11 months ended November, customs data showed, partly due to disruptions from mine accidents in the key producing hub of Shanxi.

Indian buyers gravitated towards cheaper Indonesian and South African thermal coal at the expense of Russian and Australian cargoes, Bigmint data showed.

"As Russian coal became less price-competitive, countries like Indonesia and South Africa have regained their positions as major suppliers to India," said Vasudev Pamnani, director at India's I-Energy Natural Resources.

China boosted procurement of thermal coal from neighbouring Russia and Mongolia in 2024, cutting dependence on top exporter Indonesia.

"Any reduction in Chinese demand will likely impact smaller Indonesian suppliers first, before rolling onto other marginal suppliers such as Colombia or South Africa," Argus said in its annual report.