China coal short-term outlook November 2022 Report

Commodity Market Report 05 December 2022

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Report summary

November saw a new coronavirus outbreak in China, impacting all provinces. Daily new cases reached over 40,000 later in the month, the highest ever. Coal demand contracted significantly, with throughput in four key ports, Qinhuangdao, Caofeidian, Jingtang, and Huanghua, dropping to 1.44 Mt/d from 1.91 Mt/d last year or the average of 1.88 Mt/d for the first ten months of 2022. As a result, the QHD price dropped over RMB350/t in November. The coronavirus resurgence also created big trouble in the truck transport of coke and coking coal, incidentally providing temporary support against the price decreases in the first half of the month. With positive signs from the government about further relaxing the coronavirus constraints and lending help to property developers, we expect market sentiment to improve but no significant demand changes in December.

Thermal demand: pandemic outbreak curtails demand
Met demand: gloomy outlook despite far-off hope
Various disruptions resulted in a 4.3% or 17 Mt month-on-month production decline in October
Domestic production is struggling for growth in November and December
Thermal imports: the price for lower quality seaborne coal falling along with China’s domestic price
Met imports: Russia and Mongolia to account for 70% of China’s coking coal import
Thermal price: prices slumped as the coronavirus and warmer temperatures diminished demand
Thermal outlook: the QHD price to fluctuate around RMB1,200/t
Met price: the coronavirus surge inadvertently supported the coal price – but higher prices are unsustainable