The Chinese are not just cutting back on their massive consumption of fossil fuel, but they are also slashing its imports. The reason: they're making a lot of this pollutant themselves.
According to economists, the world's largest buyer of coal is likely to buy less from overseas in 2020 after a raise this year. With domestic production rising to a record and global demand close to a peak, miners from top exporters like Indonesia and Australia will be squeezed.
China's coal imports sped ahead this year, shocking many who had expected that in later months the government would strictly suspend shipments just as it did in 2018.
With economic growth at its lowest in decades amid a trade war with the United States, import curbs were eased on the nation's most consumed fuel to help mitigate a slowdown's pain.
Beijing routinely restricts imports of coal to help domestic miners in a wider effort to reduce the fuel dependency of the country. While the country encourages larger and more productive mining operations, underpinning forecasts for lower imports in 2020 is the outlook for increasing domestic supply.
In the first 11 months, China purchased 299 million tons of coal for power and steel, 10 percent above year-ago levels, and a record for the time.
To be able to support domestic miners and maintain balanced trade with exporting nations, it is on course to reach a 200 million to 300 million-ton range proposed by an industry official as appropriate.
With more local supply coming in, Chinese import restrictions will be a permanent feature, contributing to next year's 25 million-ton decline in imports of thermal coal, Morgan Stanley reported.
The cutback would counter the growth in demand elsewhere in Asia, and seaborne prices could prolong a downturn from about $79 in 2019 to an average of $66 a ton, the bank said.
For a nation that consumes and produces half of the world's coal, China's import curbs' intensity may vary depending on the conflicting government goals of protecting domestic miners and power plants.
Utilities will face additional pressure from January as market reforms are expected to result in lower prices of energy, which may affect the bottom line.
Zeng Hao, an analyst at Fenwei Energy Information Services Co., is one of the few who expects China to further loosen its hold on coal imports by 2020 as policymakers would be unwilling to interfere in "market-based activity" amid the slowing economy.
Economists surveyed by Bloomberg this month expect China's top leadership to set the target of "about 6 percent" of economic growth by 2020, which suggests a continued slowdown in growth. The goal for this year is 6 percent to 7 percent.
