Morgan Stanley Warns of Possible Restrictions Amid Global Market Shifts

As the world’s largest coal importer and consumer, China is signaling potential moves to tighten import controls, according to Morgan Stanley analysts. While outright bans remain unlikely due to WTO obligations, measures like import delays or stricter inspections could emerge to address a crippling oversupply.

Surplus Challenges Profit Margins
Domestic coal miners are grappling with weak demand growth and record supplies, squeezing profitability. Last year, China imported a whopping 542.7 million tons (+14.4% YoY), driven by low global prices. However, sluggish demand now threatens to plunge prices further.

Industry Groups Call for Action（see pic）
China’s top coal associations—the China Coal Industry Association and China Coal Transportation & Distribution Association—urged members to cut low-quality imports and reduce output. Major miner China Shenhua Energy has already halted April spot coal purchases.

A Familiar Pattern?
China previously restricted coal imports in 2014–2018 to stabilize domestic markets. Analysts note that while energy security remains a priority, protecting miners’ profits now outweighs past import-friendly policies.

Coal’s Long-Term Role
Despite the current glut, coal will remain critical to China’s power mix for years to come, serving as a backup for renewables. Electrification of homes and transport will sustain demand growth in the long run.

China’s potential restrictions could ripple through global coal markets, impacting prices and trade flows. While renewable energy adoption is accelerating, coal’s dominance in baseload power ensures its strategic importance—even amid short-term volatility.


Source：Xinde Marine News Chen Yang