Oil / Commodities - China’s cabinet has confirmed that the addition of an extra 300 million tons of coal mining capacity will happen this year, a blow to shippers already contending with weaker Chinese imports. The authorities had not previously given a timeline for the ramp up, which threatens to upend the global market for the dirtiest fossil fuel. China’s year-to-date imports are already running almost a quarter below the pace set in 2021 due to record domestic production and price controls that disfavour its main suppliers in Indonesia, Russia and Mongolia. China is by far the world’s biggest consumer and producer of coal, mining over 4 billion tons last year. The extra capacity looks calibrated to cover a typical year’s imports, although with Chinese demand set to grow until at least mid-decade, overseas purchases are unlikely to be cut out of the equation entirely. Citigroup calls China’s willingness to walk away from overseas coal supplies a potential game changer for the world market, which poses major downside risks to global fossil fuel prices over the next few years.
Newsletter - April 21, 2022
Newsletter - April 21, 2022
Newsletter - April 21, 2022
Oil / Commodities - China’s cabinet has confirmed that the addition of an extra 300 million tons of coal mining capacity will happen this year, a blow to shippers already contending with weaker Chinese imports. The authorities had not previously given a timeline for the ramp up, which threatens to upend the global market for the dirtiest fossil fuel. China’s year-to-date imports are already running almost a quarter below the pace set in 2021 due to record domestic production and price controls that disfavour its main suppliers in Indonesia, Russia and Mongolia. China is by far the world’s biggest consumer and producer of coal, mining over 4 billion tons last year. The extra capacity looks calibrated to cover a typical year’s imports, although with Chinese demand set to grow until at least mid-decade, overseas purchases are unlikely to be cut out of the equation entirely. Citigroup calls China’s willingness to walk away from overseas coal supplies a potential game changer for the world market, which poses major downside risks to global fossil fuel prices over the next few years.