China's coal imports surged in August to the highest monthly level so far this year, as seasonal summer demand, driven by soaring temperatures and strained renewable output, pushed power plants to ramp up procurement, customs data showed.

The country imported 42.74 million tonnes of coal in August, up 20.02% month on month, according to the latest data released by the General Administration of Customs. Though the volume was still 6.78% lower than the year-ago level, the figure represented the narrowest year-on-year decline since April.

This month-on-month growth follows July's rebound. With heatwaves gripping much of the country and renewable energy generation constrained in some regions, coal-fired power plants saw their daily consumption rise.

This triggered a wave of restocking, and utilities increasingly favored imported coal due to its renewed price competitiveness, resulting in a spike in tender activity.

August typically sees robust coal imports in China, and this year proved no exception. Despite the year-on-year drop, the August imports rank as the third-highest on record for the month, behind 2023's 44.33 million tonnes and 2022's 45.84 million tonnes.

As of early September, northern China has started to see cooling temperatures in autumn, with coal burns at power plants beginning to recede from elevated levels. In the south, high temperatures persist but with waning intensity, and consumption is also beginning to retreat.

Stockpiles at power plants remain comfortably above safety thresholds, and long-term supply contracts continue to ensure stable deliveries. This, combined with the recent slide in domestic coal prices, has dampened short-term procurement needs and exerted downward pressure on imported coal prices.

Participants are adopting a cautious stance as prices fall, awaiting clearer market signals.

Nonetheless, the price advantage of imported cargoes has spurred an uptick in tenders from utilities in recent days. Looking ahead, the upcoming Golden Week holiday in early October could trigger further pre-holiday restocking, potentially supporting coal imports in September.

Given the higher base last September, China's coal imports are expected to post another year-on-year decrease this month.

During the first eight months, China imported 299.94 million tonnes of coal, down 12.2% from a year ago, contracting by 0.8 pp compared to the January-July period thanks to strong performance in August.