China coal short-term outlook December 2022 Report

Commodity Market Report 05 January 2023

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Report summary

Despite a scattering of positive signs in November, China’s sudden announcement on 7 December that it was cancelling coronavirus containment measures nationwide caught most market participants by surprise. Economic activities and coal demand were impacted in the short term. As supply increased and the Daqin rail line returned to normal shipments from the second week of December, the coal inventory at four key ports – Qinhuangdao, Huanghua, Caofeidian and Jingtang – increased from 22 Mt to 24 Mt in three weeks and the QHD price dropped to RMB1,200/t from RMB1,400/t one month earlier. The breaking news also persuaded participants in the downstream steel market to activate their winter stocking for the upcoming year. This helped steel mills maintain their operations and further boosted coke and coking coal demand and prices in a traditionally weak demand season. Read our report to find our view on the market in early 2023

Thermal demand: coronavirus outbreak leads to weak demand
Met demand: confidence has risen but will be tested in Q2
Daily production in November broke the threshold of 13.0 Mt/d
Labour availability will marginally weigh on supply in the near term
Thermal imports: bearish domestic market indicates weakening import demand in the first quarter of 2023
Met imports: no substantial changes despite seasonal weakness
Thermal price: China revised coronavirus rules
Met price: price increase due to robust restocking