China Coal Strategic Planning Outlook - H1 2023

China imported 69 Mt of seaborne thermal coal in the first quarter of 2023, slightly lower than 72 Mt in Q3 2021. Having brought in 246 Mt of seaborne coal in 2021, we expect China to import more in 2023 than in 2021. We believe the tight supply in the short term has allowed China to release more domestic supply. It will therefore cause China to cut imports earlier than we previously forecast in the medium term. The met coal price in March and April suppressed market sentiment, driven by sluggish steel demand and users’ unwillingness to restock coal. Coking coal prices will not quickly rebound as steel demand and prices will not improve until Q3. In the long run, the domestic coking coal price will stay close to the marginal cost, at around RMB1,400/t. This low price will come as demand shrinks due to a decrease in the intensity of steel demand in the economy. In addition, coke use is dropping as hydrogen injections replace it in the blast furnace.