S&P/ASX 200 Index (ASX: XJO) coal shares have struggled in 2024 amid slumping coal prices.
Year to date the New Hope Corp Ltd (ASX: NHC) share price is down 16%.
And shares in rival coal stock Whitehaven Coal Ltd (ASX: WHC) have slumped 15% this year.
Last April coal was trading for almost US$200 per tonne. That slipped to lows of US$116 per tonne in late February this year. Coal prices have since moved higher to around US$130 per tonne this week.
For its half year results, New Hope reported a 58% decline in its average realised coal price to AU$197 per tonne. That saw revenue for the six months fall by 45.9% year on year to $856.6 million.
It was a similar story with Whitehaven.
The ASX 200 coal share achieved a greatly reduced realised average price of AU$220 per tonne over the six months. The miner's half-year revenue plunged 58% year on year to $1.59 billion.
So, could China's shifting market dynamics help reverse the slide?
Image source: Getty Images
Chinese tailwinds for ASX 200 coal shares?
It's been a bit over a year since China lifted its import restrictions on Aussie coal, offering a boost to ASX 200 coal shares.
Coal imports were targeted in 2021 alongside other Aussie commodities after Australia's government called for an international inquiry into the Covid origin.
While below pre-pandemic levels, China's coal imports from Australia reached 52.5 million tonnes in 2023. December's 6.7 million tonnes of Aussie coal imports were up 6.4% month on month, according to Reuters.
China makes up more than half of the global coal consumption. And despite a huge domestic mining industry, Chinese coal imports hit a record high of 474.4 million tonnes in 2023.
Which brings us to the latest Chinese production data, which could help rekindle ASX 200 coal shares.
According to China's National Bureau of Statistics, domestic coal production fell 4.2% in January and February compared to the same period in 2023. The first such pullback since September 2021.
But, as Bloomberg reports, China remains heavily reliant on coal-fired energy, with coal power generation increasing by 9.7% year on year over the first two months of 2024.
And while Chinese coal demand isn't forecast for significant growth, it's also not expected to abate any time soon.
According to Zhang Hong, deputy secretary-general of the China National Coal Association:
Coal demand is reaching a plateau period, but its fundamental role in supporting China's energy supply safety is hard to change in the short-term. The role of coal as primary energy and a fallback for ensuring energy security remains unchanged, even when it is close to reaching a plateau.
With China's coal appetite forecast to remain voracious amid signs of crimping domestic production, ASX 200 coal shares like New Hope and Whitehaven could stand to benefit.
