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Submitted By bandimohit7
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Pages 8
Bandi Mohit Sai Kumar
MBA-IB, Sec: A
1226112109

The World's Greatest Coal Arbitrage: China's Coal Import Behavior and Implications for the Global Coal Market

Summary
China is home to the world’s second largest proven coal reserves after the United States. In addition, prior to 2009, China was a net coal exporter. Coal is a cornerstone of the Chinese economy, representing 77 percent of China’s primary energy production and fueling almost 80 percent of its electricity. Moreover, China is the world’s top coal consumer, accounting for nearly half of global consumption in 2010.
Over the past decade, China’s domestic coal output has more than doubled while its coal imports have increased by a factor of 60—the country’s dependence on other nations’ coal exports is growing. In 2009, the global coal market witnessed a dramatic realignment as China burst onto the scene, importing coal from as far away as Colombia and the United States. With 182 million tons (Mt) of coal sourced from overseas suppliers in 2011, China has overtaken Japan as the world’s top coal importer. Moreover, as the world’s top coal consumer, China’s imports could rise significantly again by 2015.
China’s recent move from being a net coal exporter to a net coal importer portends significant changes on the global stage, especially in terms of climate change. Understanding China’s rising coal imports is crucial for managing their global impact.
Introduction
In 2009 the global coal market witnessed one of the most dramatic realignments it has ever seen– China, long a net exporter of coal, suddenly imported a record-smashing 126 Mt tons This inversion of China’s role in global coal markets meant that Chinese imports accounted for nearly 15% of all globally traded coal, and China became the focal point of global demand as traditional import markets like Europe and Japan stagnated in the wake of

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