China coal long-term outlook H1 2020: post-pandemic stimulus measures boost near-term coal demand

The coronavirus pandemic sent the global economy plunging in 2020. However, China has been one of the first to recover thanks to effective containment measures and economic stimulus packages. These packages will add demand for thermal coal in the near term, sustaining domestic prices. However, we maintain our view of import demand reducing in the long term. Strong domestic supply will gradually replace the need for thermal coal imports. But the imports will stabilise at 100 Mt in the long term. We still expect hot metal and metallurgical coal demand to increase year-on-year to a peak in 2020 before falling for the next 20 years. Oversupply will push the price of benchmark metallurgical coal Liulin #4 CFR Tangshan down to RMB1,470. Although overall metallurgical coal demand will fall after 2020, domestic supply will also decline, which will keep coal imports above 50 Mt in the long run. For more details, please read our long-term outlook.