Oil Report

UPDATE 1-China coal imports may hit 170 mln T in 2010

* Key coastal regions power use is driver for coal imports

* Strong imports seen due to power need - IEA

* Europe, Asia set to compete for coal supply in H2

LONDON, May 12 (Reuters) - Net coal imports to China, the world’s biggest coal producer, could soar by 70-100 pct to 170 million tonnes or more in 2010, boosting coal prices globally, if China’s power use boom continues, according to exporters and analysts including the International Energy Agency.

Despite domestic coal output of over 3 billion tonnes a year, China’s 2009 net imports soared to 100 million tonnes, having been forecast at 50 million at the start of the year.

“In the context of China being set to overtake the U.S. this year as the world’s largest electricity consumer, with power demand growth of 24 percent in some regions, China could easily import 170 million tonnes this year,” said Brian Ricketts, coal analyst with the Paris-based International Energy Agency.

“It would not surprise anybody if they did -- China’s electricity consumption growth is astounding,” Ricketts said.

Worldwide annual seaborne trade in thermal coal is around 650 million tonnes of which about 400 million is in Asia. A rise of 170 million in Chinese demand will tip the balance steeply.

Coal prices rose by $10.00 a tonne in May to around $90 delivered into Europe and FOB South Africa’s Richards Bay on growing anxiety among European end-users about tight supply.

Chinese power use growth overall and in key coastal regions has been leaping ahead and the bulk of newly-added generation capacity is coal-fired [ID:nTOE64D02Z].

China’s coal imports surged in March partly because drought cut hydropower output [ID:nEAP001322] <COALSTAT/CN>.

Two of Indonesia’s biggest coal exporters to China said import demand has confounded their expectations this year and all the signs are that it will continue strong through 2010.

These same exporters have in the past been swift to admit when Chinese import buying has dried up and do not rely on the Chinese market to place spot tonnes.

Asia, including India, South Korea, Taiwan, Japan, the Philippines, Malaysia, is a growing market for Pacific coal producers. China is a fairly recent heavyweight importer.

A senior official at one of the Indonesian producers who pioneered sales into China’s coastal regions said he expected net imports this year to rise 70-100 pct - to 170-200 million tonnes, all in the coastal regions.

“There are always variables with China, it’s never simple but we have solid reasons for believing that domestic prices will remain higher than import and it will not be possible for the necessary supply to come to the coast from the domestic mines,” the offical said. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For a graphic on China's coal imports and exports click on: here