'Worst Power Shortage' in China: "Release Stockpiled Australian Coal Despite Import Ban"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] Reports have emerged that China is releasing Australian coal stored at ports after imposing import bans, as the country continues to face power shortages due to a lack of coal for power generation.

Major foreign media outlets cited sources in the trade industry in eastern China on the 6th, reporting that some of the Australian coal stored at ports began to be released from the end of last month.

Previously, China had halted imports of Australian coal in October last year amid tensions between the two countries, after Australia called for an official international investigation into the theory that COVID-19 originated in China.

At that time, Australia was China's second-largest coal supplier after Indonesia.

Sources indicated that approximately 1 million tons of Australian coal, which had been stored for several months in bonded warehouses along the Chinese coast without customs approval, are expected to be released.

Another trader also mentioned that Australian coal stored in bonded warehouses is scheduled to be released starting this week.

However, 1 million tons of coal corresponds to China's daily import volume, and experts say this amount is insufficient to resolve the coal shortage issue.

China has been encouraging domestic coal producers to increase output and power generation companies to boost coal imports to alleviate the power shortage. However, imports of Australian coal have not resumed.

Another trader forecasted, "Without resuming imports of Australian coal, the supply shortage will continue for the time being," adding, "Since China has been reducing production for nearly five years, it will take time to increase domestic production."

He also expressed concern, saying, "(Coal supply) is not optimistic," and "The coal shortage problem is likely to persist at least through the fourth quarter and possibly until February or March next year, after the heating season ends."

The China National Coal Association, a producers' group, also expressed concerns at the end of last month in a notice, stating, "The supply of coal for power generation continues to be insufficient, and coal inventories are very low," and "It is difficult to be optimistic about coal supply during the winter season."

Trade officials noted that coal shipments from Russia and Mongolia are limited due to reliance on rail transport, while imports of Indonesian coal via ports are affected by weather conditions such as rainfall.

Meanwhile, Zhejiang Province, which is experiencing power shortages, imported coal from Kazakhstan on the 4th, making efforts to secure coal supplies.

This is the first time Zhejiang Province has imported coal from Kazakhstan.

Additionally, Chinese financial authorities have instructed financial institutions to strengthen funding support for companies involved in coal imports until next spring. They have also ordered banks, insurance companies, and securities firms to halt investments in speculative international commodity products such as coal, steel, and non-ferrous metals.

This content was produced with the assistance of AI translation services.