Chinese coal imports may rise as drought saps hydropower - UBS
According to UBS AG, China which relies on coal to produce more than 70% of its electricity, may increase imports of the fuel by 1 million tonnes a week as drought conditions cut hydropower output.
UBS analysts led by Sydney-based Tom Price in a note citing industry said that hydropower capacity has fallen as much as 20%.According to UBS, electricity generated by hydro dams accounts for about 15% of China's overall supply. Rivers in eastern Jiangxi province are at their lowest levels on record because of reduced rainfall, the official Xinhua News Agency said last month, citing an unidentified spokesman with the provincial drought relief headquarters.
Additional imports of seaborne coal are needed for as long as the drought persists or until supplies stabilize in the second half, according to the report. UBS said that China’s coal supplies are very tight because of higher energy consumption growth before the peak summer period.According to UBS, while production is expanding at a robust rate, the increase may not be enough to fill the gap. Imports of coal, including power station and steel making varieties, averaged 10.8 million tonnes a month in the first quarter.
Additional imports of seaborne coal are needed for as long as the drought persists or until supplies stabilize in the second half, according to the report. UBS said that China’s coal supplies are very tight because of higher energy consumption growth before the peak summer period.According to UBS, while production is expanding at a robust rate, the increase may not be enough to fill the gap. Imports of coal, including power station and steel making varieties, averaged 10.8 million tonnes a month in the first quarter.
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