China's imports of thermal coal in the opening quarter of 2023 have soared to new highs as utilities and businesses restocked in anticipation of greater energy use following the easing of strict zero-COVID policies that curbed coal demand in 2022.
Total thermal coal imports through March soared 81% from the same period a year ago to 65.7 million tonnes, according to ship-tracking data from Kpler.
Coal ports along China's south and east coasts accounted for more than 45 million tonnes of the total imports, revealing sharp rises in demand along the country's main manufacturing corridors.
With China having been largely sidelined from coal markets in 2022 by repeated battles with COVID-19, the country's aggressive return to coal import markets so far in 2023 raises the prospect of a surge in coal-fired emissions from the world's largest goods manufacturer and exporter.
Ports feeding China's south coast saw the largest year-over-year increase in thermal coal imports.
Four key southern ports - Guangzhou, Qinzhou, Huizhou and Fangcheng - totalled more than 13.2 million tonnes of imports between them through March, up more than 90% from the same period in 2022.
The southern region as a whole saw imports jump to 19.5 million tonnes in the first quarter, up by more than 10 million tonnes from the same period a year ago and the highest since at least 2017, according to Kpler.
While China as a whole uses domestic coal production for over 90% of its coal needs, most of Southern China's coal-fired power plants rely overwhelmingly on imports.
Large distances from China's main coal mines in the north make seaborne imports from exporters like Indonesia more economical than domestic rail and truck freight for most southern power producers and coal-burning plants and factories.
The port of Guangzhou, which feeds power plants and factories throughout China's famed Pearl River Delta, saw coal imports fall by 34% in 2022 from 2021 as COVID-related movement restrictions snuffed out power consumption.
Imports into Guangzhou have climbed by 9.2% for the first quarter of 2023 from 2022's levels, indicating scope for further rises in coal imports into the hub should factory output continue to gather momentum.
The port of Qinzhou, in the Guangxi region, has seen thermal coal imports jump nearly threefold to 4.3 million tonnes in the first quarter of 2023 from the same period in 2022.
That makes puts the port - which handles materials into and out of the region's producers of textiles, fertilizer and engines - on track to be one of the largest coal entry points into China in 2023.
The largest coal ports along China's east coast - spanning Fujian to Shandong provinces as well as the Shanghai municipal region - drew in a total of 25.8 million tonnes of coal in the first three months of 2023, compared to 15.4 million in the first quarter of 2022.
The region imported over 106 million tonnes in 2021, indicating a quarterly pace in excess of 25 million tonnes can be maintained if power needs dictate.
However, the eastern region is also home to some of China's largest liquefied natural gas (LNG) import terminals, so many power producers and large plants in the area have the means to use both coal and natural gas in their energy generation mix.
That said, much of the industries based along the east coast are oriented towards the production of low-value commodities such as metals, chemicals, plastics and textiles, which tend to be highly cost sensitive.
If global demand for those materials climbs over the course of 2023, then the producers of them may benefit from rising end-product prices that may give them scope to absorb rising energy prices tied to the use of natural gas.
But if global goods demand stalls, then many east coast industries may be forced to keep costs in check and may resort to favouring cheaper coal power over cleaner gas.
Of all regions, ports across northern China saw the steepest annual decline in coal imports in 2022 from 2021, mainly due to the ability of power producers in that area to access cheaper local coal in place of pricier imports.
However, coal imports into key northern ports so far in 2023 have climbed by 83% from the first quarter of 2022, to over 10 million tonnes and the highest for that time slot since at least 2017.
This suggests that utilities and heavy industry have opted to restock coal reserves from the international market in recent months in anticipation of a sustained recovery in demand from the area's producers of cars, pharmaceuticals and chemicals.
In combination, all of China's main economic hubs are on track to steer the country's thermal coal imports to new heights in 2023, reversing the slump seen in China's coal use in 2022.
The collective climb in coal use throughout China's main industrial hubs will also elevate coal-related emissions, which already scaled record highs in 2022 despite China's reduced involvement in coal markets last year.
The opinions expressed here are those of the author, a columnist for Reuters.
(Reporting By Gavin Maguire; Editing by Christian Schmollinger)