LAUNCESTON, Australia, Aug 27 (Reuters) – Asia's seaborne imports of coal for power generation rose to an eight-month high in August, but the increase was mainly driven by developed countries in north Asia rather than the usual majors such as China or India.
A total of 79.87 million tonnes of the fuel, mainly used for power generation, is due to arrive at Asian ports in August, according to data compiled by commodity analytics firm Kpler.
This is up from 77.1 million tonnes in July and the highest level since December's 80.54 million tonnes.
Demand for coal for thermal power generation in Asia has accelerated in recent months as warmer-than-usual summer weather boosted demand for air conditioning.
The increased demand for coal used in electricity generation is being felt most sharply in developed countries in North Asia, such as Japan, South Korea and Taiwan.
Japan, Asia's third-largest coal importer after China and India, is expected to import 9.09 million tonnes of thermal coal in August, down from 9.53 million tonnes in July, according to Kpler.
However, July and August were Japan's busiest months for imports of coal for thermal power generation since the winter peak in January, and August imports also exceeded the 8.91 million units recorded in the same month last year.
South Korea, Asia's fourth-largest coal importer, is expected to import 8.27 million tonnes in August, up from 6.58 million tonnes in July and the highest level since July 2022.
Taiwan's imports in August were estimated at 4.13 million tonnes, down slightly from July's 4.46 million tonnes but the highest for both months since September last year.
What Japan, South Korea and Taiwan have in common is a preference for higher quality thermal coal, the standard being Australian coal with an energy content of 6,000 kilocalories per kilogram (kcal/kg) loaded at the port of Newcastle.
An index of that grade, measured by commodity price reporting agency Argus, hit its highest price since late December in the week ended Aug. 23, closing at $146.03 a tonne.
That was up slightly from $145.92 a tonne the previous week, but the index was still up 11.7% from its mid-year low of $130.68 hit in the week ended June 28.
Japan and South Korea's imports of coal for thermal power generation and Newcastle prices
China, India
Prices for high-quality Australian coal are rising due to growing demand in North Asia, but the same cannot be said for lower-quality fuel preferred by buyers in China, India and even Southeast Asia such as Vietnam and Malaysia.
Australian coal with an energy content of 5,500 kcal/kg fell to $86.41 a tonne last week, its fourth consecutive weekly fall and now its lowest since April.
Prices for Indonesian coal, with an energy content of 4,200 kcal/kg, fell to a one-year low of $50.64 per tonne in the week to August 23, marking a fifth consecutive week of declines.
Indonesia is the world's largest exporter of thermal coal, with Australia in second place, while China and India are the biggest buyers of Indonesian cargoes and lower-quality Australian fuel.
China's seaborne thermal coal imports rose slightly to 29.97 million tonnes in August from 28.52 million tonnes in July.
However, over the past four months, China's imports of coal for thermal power generation have remained essentially flat and stayed in a narrow band around 30 million tonnes, indicating that the large increases in demand over the past two years are moderating.
India is expected to import 13.45 million tonnes of seaborne thermal coal in August, down slightly from 13.67 million tonnes in July.
Like China, India's imports have remained essentially stable at around 13.5 million tonnes in the past three months.
The stable situation in China and India partly explains the recent gradual downward trend in low-rank coal prices, while increasing imports in developed countries of North Asia justify a move towards higher quality coal.
However, demand in North Asia is highly seasonal and is entering a quiet period between the summer and winter peaks, which could put downward pressure on Newcastle index prices.
But a lot will depend on whether utilities in these countries maintain sufficient reserves before the winter peak, which could lead to stronger-than-usual demand in the off-season.
The opinions expressed here are those of the author, a Reuters columnist.
Sign up here.
Our standards: Thomson Reuters Trust Principles. Opens in new tab
The opinions expressed are those of the authors and do not necessarily reflect the views of Reuters News, which is guided by the principles of integrity, independence and freedom from bias.
Purchasing License Rights
