China's coal industry says it doesn't expect imports to increase this year, but the evidence from the first quarter is that the appetite of the world's biggest buyer remains ravenous. China's imports of all grades of coal from the seaborne market were 97.43 million metric tonnes in the first quarter of 2024, up 16.9% from 83.36 million tonnes in the same period in 2023, according to data compiled by commodity analysts Kpler.
The robust growth in imports contrasts with the downbeat assessment of China's coal sector at an industry conference in Xiamen last month, where the consensus of views was that imports will remain flat, or even decline in 2024. China imported a record 474.42 million tonnes of coal in 2023 and the consensus of forecasts is for arrivals this year to be in a range between 450 and 500 million tonnes.
Official customs data for the first two months of 2024 showed total coal imports of 74.52 million tonnes, up 23% from the corresponding period a year earlier. The customs numbers include coal that comes overland from neighbouring countries, mainly Mongolia, which supplies mostly metallurgical coal used to make steel.
While China does import some metallurgical coal from the seaborne market, the overwhelming majority is thermal coal, used mainly to generate electricity and also in some industrial processes. The steady expectations for coal imports contrast with expectations that China's power generation in 2024 will increase 5.3% from 2023, when it gained 6.9%, exceeding economic growth of 5.2%.
Electricity output is rising faster than gross domestic product as more industrial processes are electrified, electric vehicle sales increase and consumers spend more on appliances such as air conditioners. While there are other factors that go into China's power generation, such as how much hydropower generation may rise, it's still likely that coal will be called on to meet much of the increased demand. The main unknown factors for thermal coal imports are whether China's domestic output will rise enough to cover demand growth, and if import prices will remain competitive with domestic supplies.