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Shanghai. China’s appetite for imported coal will provide a solid floor for global prices of the commodity this year, but its imports may miss last year’s peak as price-sensitive buyers shy from rebounding rates.

China sucked up the excess coal supply in the Asia-Pacific market in 2009 and attracted coal from as far away as Colombia, South Africa and the United States as the economic meltdown shriveled world demand and pulverized international prices.

This year, analysts say, China’s coal consumption growth could keep pace with economic growth, forecast at 9.5 percent by a Reuters poll.

“The consensus is that China’s coal output is likely to hit 3.3 billion tons, up from last year’s 3 billion tons,” said Lu Ping, an analyst at China Merchants Securities.

“Demand is probably going to grow 8 to 9 percent, in tandem with GDP growth. Imports may fall below 100 million tons in 2010, unlikely to stay on last year’s stunning level. It won’t be as easy to buy coal from the international market as last year.”

China’s coal needs are mainly met by its vast domestic production. So a small variance in domestic output can trigger a big swing in imports.

With 2010 output forecast at 3.3 billion tons, 9 percent demand growth would imply a fall of about 10 percent in net imports, and every 1 percentage point variance in demand would raise or lower annual imports by about 30 million tons.

If the 2010 output turns out to be just 1 percent higher than that, at 3.3 billion tons, net imports could slump as much as 90 percent from 2009.

Asia’s benchmark thermal coal prices at Australia’s Newcastle port have risen nearly 30 percent since late August, peaking above $100 a metric ton in January before easing to around $95, in a buying rush partly triggered by a supply crunch after China trimmed domestic output by closing small mines.

Those closures also contributed to a tenfold leap in China’s net imports of higher grades of coal used in steelmaking.



Reuters