(Repeats to remove text of previous update)
* Imports drop despite expectations of rising seasonal demand
* May shipments down 40.6 percent on year - Reuters calculations
* Year to date imports down 38.2 percent
By David Stanway and Kathy Chen
BEIJING, June 8 (Reuters) - China’s coal imports slumped sharply in May as policies aimed at cutting imports of low-quality grades and increasing the use of cleaner energy undermined industry expectations of a pick-up in seasonal demand, data showed on Monday.
Total imports in the first five months of the year reached 83.26 million tonnes, down 38.2 percent compared with the previous year, according to preliminary data from China’s General Administration of Customs.
May’s imports of 14.25 million tonnes were down 28.6 percent on April, according to the data, while Reuters calculations showed that imports were down 40.6 percent compared to May 2014.
Last week, major Chinese coal firms had raised their contract prices for the second time in a month in anticipation of demand rising over the summer season.
But analysts said any upturn in coal purchases would be limited despite relatively low inventory levels at thermal power plants, with hydropower likely to meet a large share of the increase in power demand.
“Imports are constantly decreasing compared to last year due to new policies, and the use of new (renewable) energy,” said Zheng Nan, an analyst with China’s Shenyin Wanguo Securities.
The import data includes lower-grade lignite, a type of coal with lower heating value that is largely supplied by Indonesia.
In previous summers, southern coastal power plants would often turn to foreign markets because of severe transportation bottlenecks, but weaker demand and improved rail capacity means that is unlikely to be a factor this year.
Buyers last year enjoyed a 20 yuan ($3.22) per tonne discount if they bought coal from overseas, but that price gap has now been reversed, said Zheng.
“Domestic production is now cheaper than imported coal ... Some are transporting coal from Inner Mongolia instead because the cost of land freight is cheap due to the cuts in oil prices,” he said.
With domestic coal consumption expected to fall around 5 percent this year as a result of the slowing economy, China has been trying to prop up prices by tackling oversupply.
It has urged big domestic producers to cut output and tightened quality inspections at ports with the aim of limiting foreign supplies. Higher tariffs on low-grade imports has also helped stem the tide.
Benchmark 5,500 kcal/kg spot prices at the port of Qinhuangdao SH-QHA-TRMCOAL inched up 5 yuan ($0.80) to 415 yuan per tonne last week, but they remain 20 percent lower than at the start of the year. ($1 = 6.2035 Chinese yuan) (Additional reporting by Beijing Newsroom; Editing by Richard Pullin and Tom Hogue)