China emerged as one of the top importers of U.S. coal in the fourth quarter of 2020 as the country banned Australian coal from entering its territories amid diplomatic tensions.
U.S. coal exports in the three-month period totaled 17.4 million tonnes, down 7.3% year over year but 25.1% higher quarter over quarter, according to data compiled by S&P Global Market Intelligence.
China had the highest gain in coal imports from the U.S. among the top destinations in the fourth quarter of 2020. The Asian country imported 1.0 Mt of coal from the U.S. during the period, a 251.8% increase year over year and a 748.2% jump quarter over quarter.
With the unofficial ban on Australian coal in place, Chinese buyers turned to other major producers to maintain operations.
“As Chinese domestic coking coal reserves are depleted, they are experiencing a reduction in quality so need to supplement this coking coal with imported coal to maintain the correct coal quality for steelmaking,” Market Intelligence mining analyst Oliver Woolard said. “Although shipments from Australia dropped, Chinese buyers are shifting the balance to other producers of high quality coking coal with the U.S., Canada and Russia benefitting.”
Other countries in the region offer coking coal of good quality, but only the U.S. has comparable coking coal quality to Australia, Woolard said.
“It is simpler for Chinese buyers to import U.S. coking coal than adapt their processes to accommodate different coking coal quality, hence increasing imports,” Woolard said.