China 2012 coking coal import growth seen up 10%

China's import of coking coal, a key steel-making ingredient, is seen to rise 10 percent to reach around 50 million tonnes this year, with most of the rebound seen coming through in the fourth-quarter, two major Chinese players said on Wednesday.

Despite a double-digit percentage gain, the increase of around five million tonnes in terms of volume is seen as lacklustre compared with global coking coal export supplies of 240 million tonnes last year.

"We see 2012 imports at around 50 million tonnes and prices could be pressured because China will be receiving a lot of supply options from every exporter in the world," Sun Xuefeng, manager at Sinosteel Raw Materials, told the Coaltrans conference in Beijing. 

China is the world's largest coking coal producer and imports only around 10 percent of annual consumption. It imported 44.6 million tonnes of coking coal in 2011, a 5.5 percent decline from year ago, as the government's year-long clampdown on the property sector finally hammered steel producers.

Sun reckoned China's appetite for imports would only see a noticeable pickup towards the fourth quarter of this year as the impact of more monetary policy easing and economic rebound starts to flow through.

Demand for imports in the second-quarter is expected to be sluggish as a weaker-than-expected seasonal recovery would force traders to offload stocks which they had built up in previous months, in turn pressuring domestic prices, Sun said.

Miners in top exporter Australia, such as BHP Billiton and Anglo Coal, would face stiff competition on pricing as sellers as far flung as United States also start to push their coal to the Pacific.

Spot prices for premium coking coal from Australia were currently hovering at around $220 a tonne, compared to a headline contract price of $235 a tonne in the first quarter. State-owned Shanxi Coking Coal Group Co, the country's top producer, forecast domestic coking coal output to rise 10 percent from last year's 558 million tonnes.

"The government's lower growth target of 7.5 percent this year means investments in infrastructure and property will ease, stabilising China's coking coal consumption," said Yang Gengui, general manager at Shanxi Coking Coal, who also forecasts this year's imports at around 50 million tonnes.

"Looking ahead, I don't think we will see anymore of that explosive import growth that we saw in 2009 or 2010. Consumption and imports will rise at a more stable pace." Separately, BHP on Tuesday said it expects two-thirds of the global coking coal market to adopt spot and short-term pricing mechanism by the end of this year, as trading platform globalCOAL rolls out trading contracts for the steel-making ingredient.

Source: Reuters