China’s fast growing economy and the high consumption of power in the last two years, has forced the nation to increase its imports to meet the local demand. China was seen by the developed countries as a favourable market.
The Scenario in 2009 and 2010
In 2010 China’s coal imports rose 30.99% as compared to the previous year. The country imported 164.83 million tons of coal in 2010. The largest exporter was Indonesia. Australia, Vietnam, Mongolia and Russia were the other exporters. The import of thermal coal also increased in 2010 which crossed 100 million tons. All this was due to huge demand for power as 80% of the electricity supplied was from coal.
Until 2009, China was the leading exporter of coal. But the increasing power consumption led to a rise in imports. China imports coal because most of its reserves are of a low grade. Moreover, the coal mines are located inland whereas the factories are along the coast, so shipping coal from Australia, North America or even South America is easier. In the first half of 2010, China’s coal import rose by 78% escalating prices globally.
The situation began to change by the middle of 2010. A decline in China’s coal import was seen as Beijing endeavoured to reduce power consumption used by heavy industries and attempted to stabilize coal mining. The steep price rise of coal internationally led to a fall in imports as China began to depend on cheaper domestic production.
By the first quarter of 2011 China Coal Import began to decline and fell by about 26%. In the month of June this year exports also dropped by 44% as compared to the same period last year. In the meantime domestic price of coal moved upwards. Nevertheless, domestic production began to grow increasing the output and ensuring a regular supply.
China used to export a lot of coking coal until a few years back, but now it has become the largest importer of coking coal. Today coking coal import in China has risen to 40 million tons a year and in a few years may get past Japan too. This has led to spiralling prices.
A large part of the world depends on coal, China has been emerging as the world’s leading builder of more efficient, less polluting coal power plants, and driving down the costing in the past two years. China is now building two power plants every week.