China’s overseas coal purchases nearly doubled year-on-year in October Lean on Importers helped alleviate the nationwide power shortage caused in large part by fuel shortages.
However, after Beijing stepped up efforts to increase domestic production of China’s main fuels, nearly 27 million tons of imports are still 18% below the annual high reached in September—the lowest level since May. Coal imports in the first 10 months of 2021 are less than 2% higher than last year.
Among other energy products, natural gas purchases in October also increased from the same period last year, but fell below 10 million tons for the first time since July. Natural gas imports in the first 10 months of 2021 are still 22% higher than last year. Crude oil imports fell to a three-year low.
The first batch of import data released on Sunday did not list the total amount of thermal coal used by power plants and coking coal used by steel mills. Subsequent data may indicate that the total import volume fell from September, more due to weakening demand in the steel industry, which is cutting production to meet the production ceiling set by the government.
Government intervention
Efforts to increase coal imports are only one element of the government’s multi-pronged intervention, which has successfully brought down prices from record levels. In addition to increasing domestic supply, Beijing has also cracked down on speculation and hoarding, allowing electricity prices to rise, and persuading miners to impose price caps.
As a result, there is only one Few provinces China’s power supply is still dealing with major power outages, although a colder than usual winter may quickly put more pressure on markets that usually experience the most severe shortages in January. Nevertheless, according to a report by Citigroup last month, domestic price restrictions may make imports into the winter economically less economical.
According to the latest data, China’s success in providing adequate power supply is not entirely clear Factory activity data. Although the slowdown in manufacturing output indicates that power demand in the coming months will be far less urgent than earlier this year, it may also indicate that efforts to increase power supply are still insufficient to support strong economic growth.
Among other commodity imports, due to the decrease in steel production, the amount of iron ore fell from September, while the amount of copper imports rose slightly. On an annual basis, with the economic slowdown, the purchase volume of both has declined compared with last year.
After Hurricane Ida hit the busiest agricultural port in the United States and disrupted U.S. exports, soybean imports fell. As part of the general control of electricity consumption, some soybean processing plants in China closed in late September, which also weakened demand.
