Coal
China became a net importer of coal for the first time last year but there have been sharp increases in coal imports for some time now. Imports primarily come from Australia, Indonesia and Vietnam, according to Andrew Driscoll, head of resources research at CLSA.
Customs statistics show that Vietnam was China’s biggest supplier last year, accounting for 24.6 million tons of coal. But the import story this year may be less bullish than before. “You would expect China on an overall basis to be a net importer this year, but not at the same 20 million ton a year rate we would have expected 12 months ago,” Driscoll said.
Policies designed to keep domestic coal in-country and a rise in sea-borne coal prices means that domestic coal will be more price competitive this year than last. Indeed, China’s coal imports were down 10% year-on-year in the first two months of 2008, Driscoll said.
Rubber
China is the world’s top tire producer, and it has increasingly had to import rubber from Southeast Asia to meet demand. Indonesia is a big supplier, exporting more than 337,000 tons of rubber to China in 2006, according to the Rubber Association of Indonesia. This made China its second-largest market behind Japan, which bought about 357,000 tons the same year. In 2007, however, imports slowed and market prices softened, as supply was boosted by domestic output of natural rubber, according to the Hong Kong Trade Development Council.
Oil & Gas
Liquefied natural gas (LNG) is not widely used in China. Its consumption has been limited to Sichuan province and parts of northeastern China, where domestic gas fields are located. However, the energy-intensive east coast could potentially be serviced by natural gas, according to Fitch Ratings. The State Council projects that natural gas will account for 8% of total energy output by 2010, up from 3% in 2005. In the coastal areas, natural gas demand will likely be met by imports from Australia and Indonesia. China has built two LNG-receiving terminals in Guangdong and Fujian provinces for imports from these countries.
