As we discussed in Commodore Research's most recent Weekly Executive Report, an in-depth examination of China’s most recent thermal coal consumption data by industry (December’s data) shows that the consumption of thermal coal for power generation and heating, consumption for the production of pig iron, consumption for the production of cement, and consumption for other industrial needs all most recently contracted on a year-on-year basis — but the total consumption of thermal coal still exceeded the monthly supply of thermal coal, even as supply increased on a year-on-year basis. This often occurs in December, as demand is seasonal and always strongest in December. Our Weekly Executive Report has the exact data, but of note is that only thermal coal consumption used for the production of chemicals increased on a year-on-year basis.
While total thermal coal consumption came in at a robust 407 million tons, new supply of thermal coal that month came in at 393.5 million tons. It is normal for China’s thermal coal demand to exceed supply in December and during other winter months. Noteworthy, too, though, is that prior to December, supply had exceeded demand in seven of the prior nine months. During those months, there was a surplus in thermal coal and stockpiles increased.
