SHANGHAI, Nov 30 (Reuters) - China’s net coal imports are expected to jump a staggering 63 percent to more than 200 million tonnes in 2011, Citigroup said on Tuesday, as domestic output struggles to keep pace with blazing demand.
Booming demand from power, steel and cement producers will boost China’s domestic coal demand by 7.3 percent next year from a year ago, while supplies will increase by only 4.8 percent to 3.38 billion tonnes, Citigroup said.
“Net imports should rise from (an estimated) 143 million tonnes in 2010 to 233 million tonnes in 2011. Demand surplus expands; and both domestic price and international price should rally,” Citigroup said in a research report led by Scarlett Chen.
Any surge in China’s coal imports would not only drive international coal prices sharply higher, but could also lift freight rates as buyers are bound to scout for supplies from as far away as the United States and Colombia, as suppliers in the Pacific would not be able to meet such demand.
A Reuters poll of 10 analysts predicted China’s net coal imports would rise 13 percent to 151 million tonnes in 2011, versus a 29.1 percent gain this year. [ID:nTOE6AN08F] [ID:nTOE6AN05X]
Citigroup’s forecasts were not included in the poll.
Citigroup also said booming demand was expected to bring an 8 percent increase in China’s coal contract prices in 2011 and recommended investors buy into shares of Chinese coal firms such as Shenhua Energy Coal (1088.HK) and Yanzhou Coal Mining (1171.HK). (Reporting by Fayen Wong; Editing by Jacqueline Wong)