2021 China Coal Industry Review and Forecast

SHANGHAI, Jan 20 - In 2021, the coal industry closely followed the new national energy security strategy, with focus on promoting the safe, efficient and intelligent mining as well as clean and efficient use of coal, with the purpose of promoting industrial transformation and upgrading. The REO output exceeded 4 billion mt in 2021, while coal imports increased slightly. Coal prices gradually returned to a reasonable level. Looking ahead, coal prices are expected to stabilise as a whole in 2022, and coal supply and demand will maintain a tight balance.

In 2021, as the COVID-19 pandemic prevention and control became the new normal, the recovery of the domestic economy has increased electricity consumption of the whole society, leading to a subsequent increase in demand for coal as the main energy source. The REO output recorded a new high of 4.07 billion mt, an increase of 4.7% over the previous year and 5.6% over 2019, an average increase of 2.8% over two years.

In recent years, China's coal imports have continued to increase, recording 300 million mt in 2019 and 304 million mt in 2020, up 1.5% year-on-year. 2021 saw a decrease of imports from Australia, while China increased coal imports from other countries, especially Indonesian to ensure a steady increase in China's coal imports. In 2021, China imported a total of 323 million mt of coal with a year-on-year increase of 6.6%.

China's coal exports were small in scale and showed a declining trend. China's coal exports continued to decline in 2016-2018, and increased briefly in 2019. The exports in 2020 almost halved the amount in 2019, and continued to decline in 2021 with exports hitting 2.6 million mt, down 18.4% year-on-year.

In 2021, thermal coal prices touched historical highs. Under intensive national regulation, coal prices gradually returned to reasonable levels. The prices of 5,500 kcal, 5,000 kcal and 4,500 kcal thermal at Qinhuangdao port were 773 yuan/mt, 692 yuan/mt and 584 yuan/mt respectively as of 31 December 2021, down 213 yuan/mt, 199 yuan/mt and 208 yuan/mt respectively from 26 November 2021.

Looking into 2022, coal, as China's main energy source, is an important commodity related to national security and livelihood. As China promotes coal production and supply with a series of policies, the supply tightness has eased. In 2022, coal supply and demand may balance further, and the coal prices are expected to stabilise throughout the year.

On the other hand, the country will strictly control the growth of coal consumption during the "14th Five-Year Plan" period, and some industries will gradually apply electricity instead of coal. Hence the increase in coal supply will not be too significant in 2022.