COVID in China slows down the economy
2023.01.13 02:24
COVID in China slows down the economy
By Ray Johnson
Budrigannews.com – In December, China’s coal imports fell from a month earlier because industrial activity slowed down as a result of an increase in COVID-19 cases following Beijing’s sudden removal of strict pandemic controls.
According to data released on Friday by the General Administration of Customs, the world’s largest consumer of coal consumed 30.91 million tonnes of the fossil fuel in December, compared to 32.31 million tonnes in November. Compared to the 30.95 million tonnes imported in December 2021, that was largely flat.
Since China abandoned its zero-COVID strategy at the beginning of December, millions of people have become ill, causing factories to shut down due to a lack of workers and reducing demand for coal for industrial use and power generation.
As China increased domestic coal production and urged utilities to sign term-deals with domestic miners to improve its energy security, coal shipments to China decreased by 9.2% in 2022 to 293.2 million tonnes.
China imposed a price cap on domestic thermal coal at the beginning of the year with the intention of lowering utility power generation costs and preventing nationwide power shortages like those in 2021.
For a number of months, the policy caused domestic coal prices in China to be significantly lower than international supplies, as global coal prices soared due to supply concerns following the Russia-Ukraine war.
After the Lunar New Year in late January and early February, when factories reopen and economic recovery prospects brighten demand, it is anticipated that Chinese coal imports will increase.
In a note, analysts at ANZ Bank stated that the resumption of Australian coal shipments should also result in an increase in imports.
After an unofficial ban on coal trade with Canberra since 2020, China’s state planner has permitted three utilities and its top steelmaker to resume coal imports from Australia this month.
However, a central government order directing miners to increase production and utilities to increase their term contracts with domestic miners from approximately 2 billion tonnes in 2022 to 2.6 billion tonnes in 2023 could limit coal imports.
The China Coal Transportation and Distribution Association (CCTD) anticipates that the nation will import approximately the same amount of overseas coal in 2023 as it did in 2022: nearly 300 million tonnes.
More China’s trade balance shrank in December
