Looking at its own research along with information supplied by Global Trade Information Services and the Australian Bureau of Agricultural and Resource Economics, Macquarie said Australia’s coking coal exports were down this year but it would have been far worse without China.

According to the data, Australia’s March quarter hard coking coal exports were down 2.3 million tonnes from the corresponding period last year and 4.7Mt from the December quarter.

Macquarie said that outside of China, Australia’s exports were down 5.6Mt (32%) from last year and 8.3Mt (41%) from the December quarter.

“Strong Chinese demand looks set to continue through April and May, with vessels destined for China making up around 40% of scheduled shipping from BHP Billiton’s Hay Point terminal in May,” the investment bank said.

It noted Hay Point ships about 25-30% of Australia’s total metallurgical coal exports and that the Queensland port handled 2.7Mt of coal in the month of March, comparable to the monthly average of 3Mt for last year.

Macquarie said the port’s shipping schedule suggested a similar volume in April.

Chinese exports will rise to 40% of Hay Point’s shipping share for this month, as shown in a chart in the bank’s commodity report, whereas Chinese exports were less than 5% for the whole December quarter.

Thermal and semi-soft coal performance

Given China’s preference for low-volatile hard coking coal, Macquarie said semi-soft shipments from Newcastle were down 1.4Mt or 25.3% in April, while the global demand for pulverised coal injection coal remained extremely weak.

As a result of the weaker PCI and semi-soft coking coal demand, the bank observed that Queensland’s PCI coal was dumped onto the thermal market during the March quarter and Hunter Valley producers switched from semi-soft to thermal coal production.

Overall, Macquarie said Australian thermal coal exports for the first quarter were up 16% on the same period last year, but down 2% on the December quarter.

The bank noted a downward trend caused by dropping Japanese demand, with exports to Japan in annualised terms falling from 73.7Mt per annum in January to 54.Mtpa in March.

However, Macquarie said South Korea and Mexico showed the biggest increases in thermal coal demand during the quarter.

As South Korean coal-fired generators can use a wider variety of coal qualities than those in Japan, Macquarie said the nation was the major customer for the lower-quality metallurgical coals being sold onto the thermal market.

Mexico’s Federal Electricity Commission, on the other hand, signed a deal for a reported 11.7Mt of thermal coal in early April.

According to Reuters, the contracts were awarded to Glencore, Vitol, RWE Supply and Trading, and Noble Group, which has a 21.7% stake in Gloucester Coal.

Macquarie said the coal contracts came after difficulties in getting supply last year, which had the power utility burning heavy oil as a consequence.