China’s thermal coal demand may rise 140 mil mt, pushing up seaborne coal market: report

27th aug 2018

China might see a 140 million mt increase in raw coal demand should the currect rate of growth in thermal power continue in months to come, giving the seaborne coal market boost, according to a Citi Research report released Wednesday.

This is despite the fact that hydropower demand has been picking up during this time. For coal demand, one of the key drivers of growth in 2017 was the decline in hydropower output, which experienced negative growth in early 2017 and ended 2017 down 1.7% year on year. Although China’s hydropower output grew 2.9% in the first half of 2018, it may not be able to derail thermal coal generation growth, which rose 7.3% year on year in the first seven months of 2018, the report said.

The expected growth in China’s thermal coal demand may also be evidenced by the utilization rates of thermal power plants, which rose 5.3% year on year in the first seven months of 2018, according to the report.

The average utilization was 5,294 hours/year, indicating an average utilization rate of 60% in 2011. This dropped to 4,165 hours/year with an average utilization rate of 48% in 2016. This was largely due to the 230GW of coal fired power capacity added over the past 5 years.

China’s power demand rose 9.4% year on year in the first half of 2018. In July 2018, China consumed 648.4 million MwH of power, up 6.8% year on year, taking China’s Jan-July power demand growth rate to 9.0% year on year, the report said. In comparison, China Electricity Council had expected power demand in 2018 to grow 5.5% year on year at the start of the year.

Source: S&P GLOBAL PLATTS