Why China’s coal imports increase during the first half of 2014

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China’s coal imports

China is the world’s top coal consumer. It’s one of the key factors driving shipping rates. Its coal trade accounts for almost a quarter of the global trade. In 2013, China imported 330 million metric tonnes of coal.

Along with iron ore, coal accounts for nearly 30% of the world’s dry bulk trade volume. China’s economic health and demand for higher quality imported commodities is reflected by import data. With high iron ore and coal imports indicating high demand, shipping rates are increasing, which is fundamentally positive for dry bulk companies that haul key dry bulk materials such as iron ore, coal, and grain across the ocean.

Coal imports in the first half of 2014

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For the first half of 2014, China’s coal imports stood at 159.87 million metric tonnes—an increase of 0.9% from the same period last year. However, in June, coal imports stood at 25.05 million metric tonnes—depicting a 4.3% and 12% increase month-over-month (or MoM) and year-over-year (or YoY), respectively.

For 2014, coal imports aren’t likely to experience significant growth because the Chinese government is planning to cut taxes on domestic coal firms and implement stricter import regulations to support domestic coal miners.

Outlook

For the rest of 2014, China’s seaborne coal trade should increase towards the winter and summer, when electricity consumption is high. This may support the dry bulk shipping companies like DryShips Inc. (DRYS), Diana Shipping Inc. (DSX), Navios Maritime Partners LP (or NMM), Navios Maritime Holdings Inc. (NM), and Safe Bulkers Inc. (SB). The Guggenheim Shipping ETF (SEA) tracks the shipping companies.

 

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