Hebei Province buys the most coking coal in China, according to industry researcher Mysteel.com. The nation’s $586 billion stimulus spending is spurring automakers and property developers to buy more steel, leading Baoshan Iron & Steel Co. and Chinese mills to expand coal consumption to feed furnaces.
China’s coking coal shortage
Wu Chenghou, senior adviser of the China Coal Transportation and Distribution Association, said “Domestic demand for coking coal will rise moderately next year, while global demand may gain faster, intensifying competition.”
China’s coking coal imports rose 12-fold this year, boosting sales of BHP Billiton as the government closed smaller, unsafe mines. According to Macquarie Securities Group, JPMorgan Chase & Co. and Morgan Stanley prices may jump by between 23% and 38% in 2010, as global demand rebounds from the deepest recession since the 1930s.
“China doesn’t have enough domestic supply to meet increasing demand from its steelmakers,” said Zhang Bochun, secretary general of the Hebei Coking & Chemical Industry Association. Chinese imports in 2010 may be similar to this year, Zhang said.
Import demand by China, the world’s biggest coking coal buyer after Japan, may rise 5.6% to 38 million metric tons next year from an expected 36 million tons this year.
Bloomberg said China would be demanding more high quality hard-coking coal in the future as it expands mill. BHP Billiton, the world’s largest mining company, said China this year “emerged” to fill a demand gap for coking coal.