China's coal imports from the United States are rising despite record production of the country's main fuel, experts say.
Although its coal output more than doubled in the past decade to over 3.5 billion tons, China has also become the world's biggest coal buyer with imports of 182.4 million tons last year.
The United States had a small piece of that huge market with exports to China of 5.5 million tons in 2011, according to Department of Energy (DOE) data.
But China's energy demand is driving predictions of greater growth for U.S. exports to come.
"Exports to China could reach over 12 million tons this year based on the annualized numbers," the chief executive of Pennsylvania-based Xcoal Energy & Resources, Ernie Thrasher, told Reuters this month.
U.S. exports to China through February have already reached some 5 million tons, Reuters said.
While that's a drop in the bucket compared with China's massive consumption, the shipments are still remarkable, considering that U.S. coal comes halfway around the world.
Philip Andrews-Speed, an energy expert at the German Marshall Fund of the United States, said China's demand has drawn on increasingly distant resources since it became a net coal importer for the first time in 2009.
"It's unusual, however we have seen in the last three years that China's net imports of coal are growing, and they're buying coal from whoever wishes to sell it," Andrews-Speed told RFA.
"I don't think China really cares where the coal comes from, as long as they get it at a reasonable price," he said.
Shipping rates
Diane Kearney, an operations research analyst at the DOE's Energy Information Administration, said coal from the U.S. Appalachian region is being shipped to China through East Coast and Gulf ports.
Trade data by customs district suggest that major shipping points are New Orleans; Norfolk, Virginia and Savannah, Georgia.
The route from New Orleans through the Panama Canal to southern China ports covers some 10,500 nautical miles (12,083 miles), according to www.searates.com.
While the distance is great for coal shipment, it is not out of the ordinary for U.S.-China trade.
"It's amazing, but we buy a lot of things from China that are probably worth less than a ton of coal," Kearney said.
A combination of factors has contributed to the trade, including weak coal demand in the United States, low freight rates and logistical problems in China that make imports more practical for some coastal power stations.
Andrews-Speed noted that years of rapid growth in energy demand have left China struggling for transport capacity to carry resources from the north and west to consuming regions in the east and south.
China's coal consumption grew 9.7 percent in 2011, the National Energy Administration (NEA) said, while production rose 5.8 percent in the first quarter of this year, according to the China National Coal Association.
"That's a lot of infrastructure and investment that has to be coordinated. That's a challenge for any government or industry," said Andrews-Speed, adding that coastal Guangdong province has been importing some of its coal for the past 20 years.
China's Ministry of Railways has monopolized the rail system, leading to underinvestment in dedicated coal lines. But coastal ports were opened to competition in the 1990s, easing the way for imports, said Kevin Jianjun Tu and Sabine Johnson-Reiser in an article for the Carnegie Endowment for International Peace.
Last year, ports in neighboring Guangxi Zhuang Autonomous Region imported even more coal than Guangdong with a 61 percent increase from a year earlier, the official Xinhua news agency reported. The leading sources were Vietnam, Indonesia, and Australia.
Most shipments from Australia, like those from the United States, are coking coal for iron and steel production, while Indonesia supplies mainly steam coal for power generation, the Carnegie authors said.
Energy demand
With rising domestic production and imports, China has been burning record amounts of coal year after year.
The NEA has been considering plans to cap primary energy consumption in the 2011-2015 period for well over a year to meet efficiency and environmental targets.
Last April, Xinhua reported that the plan would limit annual coal use to 3.8 billion tons, but it is already near that level now.
The official press has raised expectations for a sweeping economic reform package in the last year of the current leadership's tenure, but it is unclear whether a mix of energy limits and market measures are part of the plan.
So far, the debate over conservation seems to have little influence over rising consumption of coal, which accounts for over 70 percent of China's energy supply.
But regardless of new measures, Andrews-Speed is wary of predictions that U.S. coal exports to China will keep growing by leaps and bounds.
In the first quarter, China's coal consumption fell despite increased production, while inventories at power plants rose 7.6 percent, Interfax reported.
The growth of power consumption also cooled in the first quarter to 6.8 percent in line with slower economic expansion, the NEA reported. Power use climbed 11.7 percent last year.
Steel consumption in the first quarter also fell 0.16 percent from a year earlier, although production increased 2.5 percent, the China Iron and Steel Association said.
The indicators seem to point toward smaller increases in coal demand and imports, but as usual, China's market is sending conflicting signals, suggesting an uptick in economic activity.
On April 23, the China Electricity Council (CEC) warned that the country will face "severe blackouts" this summer with power shortages of 30-40 million kilowatts, Xinhua reported. The industry group issued the same warning last year.
Coal prices have reportedly started rising again at north China's Qinghuangdo port. "With tight domestic supplies, China's coal imports will also be constrained by inadequate rail cargo services," the CEC said, according to Xinhua.