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China’s coal demand to remain subdued

Rising domestic output is likely to create a pressure on China’s thermal coal prices. China has decided to scrap its coal-electricity price linkage mechanism from next year in a bid to keep raw material and electricity prices low. China’s thermal coal import volumes are likely to fall 1.8% year on year to 215 million mt in 2020 due to higher domestic production displacing demand for imported coal at coastal power plants, according to Platts Analytics.

Meanwhile, India’s strong demand for seaborne thermal coal will be encouraged in 2020 due to bottlenecks in rail deliveries and domestic production issues. “We do not project a considerable increase in Indian domestic coal production in calendar year 2020, increasing only 26 million mt year on year to 735 million mt, which should underpin continued import demand growth,” the think tank said.