China’s Coal Imports Fall on Quality Inspections and Lower Demand

Importance of Coal Imports

China's top coal consumer in the world and represents its coal business for nearly a quarter of the world total. In 2014, China's coal imports fell year after year for the first time in six years. Imports fell by 10.9% to 291.6 million tonnes. Over 90% of the country's coal imports are maritime.

Crisis Coal Imports

According to Customs General Administration data, China's coal imports fell in February 2015 to 15,260,000 metric tons, down 9.1% compared to January levels of 2015. Compared to the same month a year ago, total coal imports fell by 33% as a result of quality control in Chinese ports.

"The week of the Lunar New Year holidays have limited the increase in imports," said Wang Xufeng, an analyst at Fenwei Shanxi Energy Consulting Company.From 1 January 2015 new mandatory quality inspections are effective for reducing coal flow low in difficulty and support domestic miners. Because of the ambiguity of the new policy, traders reduced their cargo numbers, driving demand lower.According to a Reuters report, traders say "Chinese ports were ordered to inspect all cargo before it is passed on to buyers, a process which normally takes about 7-15 days."

Move Forward

In the first two months of 2015, China's coal imports amounted to 32.04 million tons, down 45.3% from the same period a year ago. In the future, China urges local governments and coal enterprises to limit production to support suffering loss industry. It is also trying to cut supply by closing small mines and halt coal imports low.

Dry bulk shippers such as DryShips (DRYS), Diana Shipping (DSX), Navios Maritime Holdings (NM), and safe Bulkers (SB) will be negatively affected by the decline in coal imports. The SPDR S & P Metals and Mining ETF (XME), which invests in industries such as steel, coal and consumable fuels, gold, precious metals and minerals, aluminum and diversified metals and Mines can also be affected negatively.