China's Guangzhou and Fuzhou ports may be considering clearing some stockpiled imported coal because of tighter domestic supplies and higher prices.
Authorities at Guangzhou and Fuzhou ports in south China's Guangdong and Fujian province respectively are looking at how much stockpiled imported coal is waiting for customs clearance at the ports, according to market participants. The move could signal a possible relaxation of import restrictions, while Guangzhou port could clear 1.5mn t of imported stockpiled coal.
Fuzhou and Guangzhou ports have exhausted their import quotas in early August, meaning only some local utilities could still buy small volumes using limited quotas.
But other market participants are not optimistic about China's acceptance of imported coal. An official at an east China-based power utility said he remains cautious about booking new cargoes, saying customs authorities will stick to a previous target of limiting 2020 imports at a level no higher than last year's receipts of 300mn t.
Expiring 2020 import quotas in most Chinese customs regions have weighed on Chinese coal imports. Total receipts last month, including anthracite, coking coal and thermal coal, reached an intra-year low of 20.66mn t. This marked a fall of 37pc from the same month last year and followed a 21pc year-on-year decline in July.
Market participants expect domestic coal prices could weaken if stockpiled imported coal is cleared. Tight supplies of domestic coal, coupled with an increase in utility restocking ahead of scheduled maintenance on the Daqin railway line, have pushed up domestic coal prices for four consecutive weeks. The price of NAR 5,500 kcal/kg coal increased from $79.88/t fob Qinhuangdao on 14 August to $86.49/t on 18 September, according to Argus assessments.
Asia-Pacific coal prices have also been supported by an increase in Chinese buying interest with expectations that the 2021 quota system will take effect in January. Argus assessed prices of NAR 3,800 kcal/kg Indonesian coal at $23.61/t on 18 September, up by $1.21/t on the previous week, while prices of NAR 5,500 kcal/kg Australian coal rose to $39.79/t fob Newcastle on 18 September from $35.04/t fob on 4 September.
Customs authorities allocated some additional quotas to utilities in the northeast China provinces of Heilongjiang, Liaoning and Jilin late last month to cope with tighter domestic coal supplies ahead of the winter restocking that typically begins in October. This has boosted demand for Russian coal because of its proximity to the provinces.
