China's coal imports hit record high in 2024, up 14% y-o-y

• Coal imports cross 540 mnt in CY24
  
  
• Rising energy demand and favorable prices boost imports
  
  

In December 2024, China's coal and lignite imports surged to 52.346 million tonnes (mnt), representing a 10.7% increase compared to the same month in 2023. This rise contributed to a record-breaking total for the year, with imports reaching 542.697 mnt, a 14.4% y-o-y growth. The sustained increase in imports highlights China's ongoing demand for coal amid rising energy needs and favourable international prices. This surge in imports can be attributed to several key factors:

1. Lower hydropower generation: A decline in hydropower output, primarily due to unfavourable weather conditions such as drought, led to increased reliance on coal to meet electricity demand. With hydropower falling short, coal became a more critical energy source.

2. Increased electricity demand: As economic activity rebounded, there was a significant rise in electricity consumption, which in turn pushed up coal demand to ensure sufficient power supply. The China Electricity Council now sees 2024 electricity consumption growing by 7% to 9.9 trillion kilowatt-hours (kWh) as per a October 2024 report. The group had forecast 6.5% growth to 9.82 trillion kWh in its previous report.

3. Competitive seaborne coal prices: Lower coal prices from major exporters like Indonesia and Australia led Chinese utilities, especially in the south, to prefer imported coal over more expensive domestic options.

4. Regional shifts in supply: Southern China, which traditionally depends more on seaborne coal, saw a marked increase in imports from countries like Indonesia and Australia. These imports were favoured due to their cost-effectiveness and logistical convenience.

Domestic coal production in China grew by 1% y-o-y to 4,306 mnt from January to November 2024. However, the record-high coal imports highlight China's continued reliance on coal to meet escalating energy needs, despite efforts to transition to a more diverse and cleaner energy mix. The increase in imports was driven by reduced hydropower output, rising electricity demand, and favourable international coal prices.