【SMM Analysis】What Are the Reasons Behind the Price Increase of Coconut Shell Charcoal Imports? The Undercurrent of Multiple Overlapping Factors

According to the latest data from the General Administration of Customs, in April 2025, China imported 13,742.8 mt of nutshell charcoal, representing a 39% MoM increase and an 8% YoY decrease. The average import price of nutshell charcoal in April was $549.46/mt. In March, the average import price was $492.4/mt, indicating a 12% MoM increase in the average import price per mt of nutshell charcoal.

The recent increase in the import prices of nutshell charcoal (primarily coconut shell charcoal) is the result of multiple overlapping factors. The specific reasons can be categorized into the following five aspects:

1. Shrinking Raw Material Supply and Intensified Competition in Producing Regions

- Fluctuations in Coconut Production in Major Producing Countries

As a major global source of coconut shells, Southeast Asia faced multiple natural disasters in 2024. In Thailand, drought and pests and diseases led to a reduction in aromatic coconut production. In some producing regions of Indonesia, the efficiency of coconut shell collection declined due to abnormal rainfall at the end of the rainy season. Additionally, although Vietnam expanded its coconut planting area, the traditional "bun-kiln" production process resulted in low fixed carbon content (50%-55%) and high ash content (5%) in carbonized materials, making it difficult to meet the Chinese market's demand for high-quality raw materials.

- Adjustments to Industrial Policies in Exporting Countries

As the world's largest coconut producer, Indonesia strengthened the management of fresh coconut exports in 2024 by implementing strict phytosanitary requirements (such as a registered orchard and packaging plant system), indirectly diverting some coconut shell resources for fresh fruit exports. Meanwhile, to enhance domestic processing capabilities, Vietnam raised the export tariff rate to 30% for 18 categories of products starting from July 2024. Although this did not directly target coconut shell charcoal, the integration of the industry chain led to raw materials being prioritized for domestic factories.

- Expansion of Processing Capacity in Producing Regions

The number of newly built coconut shell carbonization plants in regions such as Indonesia and the Philippines surged, directly driving up local raw material procurement prices. For example, Indonesia improved carbonization efficiency through dynamic rotary kiln technology, achieving a fixed carbon content of 73%-76%. This attracted Chinese enterprises to establish factories locally, forming a closed loop of "raw materials - production - exports" and further intensifying resource competition.

2. Rising Transportation Costs and Logistics Bottlenecks

Fluctuations in International Ocean Freight Rates

The Red Sea crisis in 2,024 led some shipping routes to divert around the Cape of Good Hope in Africa, extending the shipping cycle from Southeast Asia to China by 30%-40%. Coupled with the threat of strikes at East Coast ports in the US, the freight rate index for Southeast Asian shipping routes increased by 17.8% YoY in Q4 2,024. In January 2,025, freight rates for large containers on the US West Coast route increased by $1,000-$1,600, while those on the US East Coast route rose by $1,050-$1,175, directly driving up import costs.

Cost Transmission in Domestic Logistics

Imported coconut shell charcoal mainly enters China through ports in Guangdong and Hainan. In 2,024, domestic road transportation costs increased by 12% YoY due to rising diesel prices, while warehousing fees rose by 8%-10% due to upgraded environmental protection requirements (such as higher standards for moisture-proofing and fire prevention).

3. Explosive Growth in Downstream Demand

Expansion of the Sodium-Ion Battery Industry

Coconut shell charcoal, with its natural porous structure, is an ideal raw material for sodium-ion battery hard carbon. Each GWh of sodium-ion battery production consumes approximately 1,500 mt of coconut shell carbonized material. As demand for sodium-ion battery cells gradually increases, so does the demand for coconut shell charcoal.

Upgrading of Demand in the Environmental Protection Sector

Demand for coconut shell activated carbon in traditional sectors such as water treatment and air purification continues to grow. For example, the market size for activated carbon used in drinking water purification in China expanded by 25% YoY in 2,024. Due to its low impurity content and high adsorption efficiency, coconut shell charcoal has become the preferred raw material for high-end water purification equipment.

4. Transmission of Policy and Exchange Rate Factors

Domestic Environmental Protection Policy Pressures

China's "dual carbon" strategy requires activated carbon enterprises to use raw materials with high fixed carbon content (≥70%). Low-quality carbonized materials from Vietnam are gradually being phased out due to their inability to meet carbon emission accounting requirements. Import demand has shifted to high-quality source countries such as Indonesia and the Philippines, exacerbating supply tightness.

Fluctuations in the RMB Exchange Rate

The offshore RMB depreciated by 0.85% against the US dollar in 2,024 and further fell below the 7.3 threshold in May 2,025, leading to a simultaneous increase in import costs denominated in US dollars. For example, the CIF price of Indonesian coconut shell charcoal rose from $450/mt in early 2,024 to $580/mt in May 2,025, with exchange rate factors contributing to approximately 15% of the increase.

5. Market Speculation and Trade Barriers

Seller's Market Dominance

Starting from the second half of 2024, coconut shell charcoal suppliers in major producing countries such as Indonesia and the Philippines have generally adopted a strategy of "limiting supply and raising prices." Domestic traders have stockpiled goods in advance to secure supply, creating a vicious cycle of "hoarding - withholding sales - price hikes." As of January 2025, the tax-inclusive factory price of imported coconut shell charcoal has risen to 4,900-5,500 yuan/mt, marking a 35% increase from the beginning of 2024.

Hidden Increase in Trade Barriers

China Customs has strengthened inspections on indicators such as impurity content and activation degree of imported coconut shell charcoal. In 2024, the number of returned shipments classified as "solid waste" due to non-compliance with composition standards increased by 40% YoY. To mitigate risks, enterprises tend to procure high-quality raw materials at higher prices, further driving up the market average price.

Summary and Trends

In the short term, the import prices of coconut shell charcoal are expected to remain at highs, driven by factors such as the rigid growth in demand from the sodium-ion battery industry, the slow recovery of raw material supply in Southeast Asia, and persistently high shipping costs. In the long term, with the implementation of expansion plans in countries such as Indonesia and the Philippines (e.g., Indonesia plans to add 100,000 mt of coconut shell charcoal capacity in 2025) and the maturation of biomass alternative raw material technologies (such as bamboo-based charcoal and straw charcoal), prices are expected to gradually pull back. Sodium-ion battery hard carbon producers should closely monitor policy developments in producing regions, secure supply through long-term agreements, and explore composite modification technologies to enhance raw material utilization rates, thereby addressing cost pressures.