“Chinese import demand is proving more durable than we had anticipated,” Macquarie said.
“It is the only bright spot for seaborne demand and has significantly reduced volume risks, particularly for Australian miners.”
Macquarie said international export figures suggested a stronger Chinese demand than the corresponding Chinese data for the first quarter, a difference of 4.9 million tonnes of growth compared to 2.2Mt recorded by Chinese import statistics.
However, Macquarie noted the discrepancy could stem from timing issues, coal classification differences, imports from minor sources and simple statistical inconsistencies.
The bank used additional trade data from Global Trade Information Services and McCloskey to paint the overall picture for the major metallurgical coal-exporting nations.
Macquarie said these nations had a 25% dip, year-on-year, in coking coal exports for the first quarter.
China was the only country out of the major destinations that had an increase in coking coal imports, with Macquarie saying metallurgical imports were down 34.7% in the other nations.
Australia’s first quarter exports of the commodity shrank by 6.2 million tonnes or 21%, which came despite a 4.2Mt jump in shipments to China, according to Macquarie.
US metallurgical coal exports outside of Canada were also down in the first quarter.
Macquarie said they fell 5.3% year-on-year (421,000 tonnes) and 9% from the December quarter, with shipments to eastern Europe down 65%, but up 16% to western Europe and 42% to Brazil.
The bank said these increases displaced Australian and Canadian volumes in western Europe and Brazil.
“Relative strength here may be due to lower contract prices in the year to March 2009, where a number of US producers settled European contracts at $US120-130/t while Australian and Canadian coal was priced to the $300/t benchmark.”
As noted by other analysts, Macquarie said domestic coking coal production remained constrained in China and it expected export momentum to the country to continue this month.
“China remains the key support and the key risk in the metallurgical coal market,” the bank said.
“China’s impact on short-term price expectations is more ambiguous, however, with recent spot trades concluded at prices below contract benchmarks.”
Macquarie said these lower deals resulted from a drop in Chinese domestic coking coal prices from $158/t in March to $138/t in May.
China’s increasing coking coal imports were partly triggered by local government clampdowns on unacceptable health and safety standards across the small mine sector, according to Goldman Sachs JBWere.
Government officials were forced to change coal mining regulations after an underground gas explosion at the Tunlan Colliery in northern Shanxi Province killed 78 people and injured 114 in February, receiving considerable media attention around the world.