LAUNCESTON, Australia, April 23 (Reuters) – Asia’s coal markets are starting to resemble Waiting for Godot, Samuel Beckett’s absurdist play where the main characters wait in vain for something that doesn’t happen.
In coal’s case, the market is expecting demand, and by extension, prices, to drop amid anticipated slower economic growth in the region and rising electricity generation from alternative sources.
The problem is that so far coal imports by the big three Asian consumers, China, Japan and South Korea, are increasing, defying forecasts for the past several months of an imminent slowdown.
It’s not only that overall coal imports are gaining, it’s also that some suppliers are gaining market share, most oddly Australia, which is one of the highest-cost producers in the region. China’s coal imports jumped 20.2 percent in March from a year earlier to 20.52 million tonnes, and at 63.796 million tonnes are up 27.3 percent in the first quarter from the same period in 2012.
Japan’s imports were 15.821 million tonnes in March, an annual gain of 5.8 percent and the fiscal year that ended in March saw imports total 106.29 million tonnes, a record high and up 4.5 percent on the prior fiscal year.
South Korea’s imports in March were 9.7 million tonnes, up 1.6 percent from the same month a year earlier, although year-to-date imports were down 3.1 percent, at 28.779 million tonnes.
The overall picture that emerges is that China and Japan, Asia’s top coal importers, are increasing purchases and South Korea, the third-ranked, is holding up well.
The obvious answer to why this is the case is that prices are low, with the regional benchmark Newcastle spot price dropping 2.7 percent to $86.64 a tonne in the seven days to April 19 from a week earlier.
While this up from the three-year low of $80.82 a tonne reached in October last year, it’s also down from the 2013 peak of $96.09 from Feb. 8, and 38 percent below the post-2008 recession high of $136.30 from January 2011.
Lower prices have encouraged buying by China, where imported coal has been cheaper on a delivered basis than much of the domestic supply.
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