China’s largest coal miner and major importer China Shenhua Energy has stopped spot purchases of imported coal as port stockpiles grow, said three traders familiar with the matter, in a move that is expected to put a damper on imported coal prices.
The decision by CHN Energy Investment Group (CEIC), Shenhua’s parent company, will affect purchases for delivery starting from April, according to a senior Singapore-based coal trader and two analysts, all of whom spoke on condition of anonymity.
The decision also applied to deliveries in late March, according to a China-based coal trader.
Shenhua did not immediately respond to a faxed request for comment.
The move by the state-owned company is expected to affect about 1 million tons of coal per quarter and does not apply to term contracts, according to a second China-based trader. No decision had been made on how long the move to pause spot imports would last, two of the traders said.
While the affected volume is small in the context of China’s record coal imports of 542.7 million metric tons in 2024, the move has fuelled market jitters over whether more companies will follow suit and whether the import pause could become government policy, according to a third China-based trader.
The policy is aimed at protecting Shenhua’s coal sales in the domestic market, said the Singapore-based coal trader, who could not recall the last time Shenhua halted such imports.
An analyst with over 10 years experience in the industry said this was the first time Shenhua had halted such imports.
Shenhua’s commercial coal sales in January fell 21.6% year-on-year to 30.2 million tons, it said in a recent filing, citing warmer temperatures affecting heating demand and the build-up of inventories. Shenhua also scaled back production by 8.5% on the year in January to 24.9 million tons.
“Coal is oversupplied both domestically and globally,” the Singapore-based trader said, adding that the move was bearish for Chinese imported coal prices.
This year’s unseasonably warm winter has weighed on coal consumption, which usually gets a boost from heating demand.
Thermal coal inventories at 55 major Chinese ports were 72.92 million tons as of February 21, data from consultancy Mysteel showed, moving towards the August 2019 all-time high of 77.46 million tons.