Commodity Trading Giant Vitol Downsizes China Coal Business
Vitol Group, the commodity trading giant, is reducing its thermal coal trading business in China that it has recently acquired, sources familiar with the plans told Reuters on Friday.Vitol is laying off coal traders in China, leaving just one trader in the Beijing office, according to Reuters’s sources.Vitol, which is the world’s biggest independent oil trader by volumes, last year bought Asian energy products and industrial raw materials trader Noble Resources Trading Limited for $209 million.At the time, Vitol said that Noble Resources is one of Asia’s leading independent energy products and industrial raw materials supply chain managers.Noble Resources operates in the supply chain of energy coal, oil products, and metallurgical coke, and is supported by its freight and logistics operations.Vitol acquired the Noble Resources coal trading team in January as part of the acquisition.China’s near-term coal demand outlook has weakened somewhat, despite the fact that coal continues to be the backbone of China’s power system and feedstock for its industry.Nevertheless, coal is still king in China despite the renewables boom with record additions of solar and wind power generation.In 2024, Chinese imports are estimated to have jumped by 14.4% from a year earlier to a record high of 542.7 million tons. Analysts attributed the rise in Chinese coal imports to falling international seaborne coal prices, which opened up the import arbitrage to China.Thermal power generation, which is overwhelmingly dominated by coal, rose by 1.5% in 2024 from a year earlier, to a record high of 6.34 trillion kilowatt-hours (kWh), data from China’s National Bureau of Statistics showed.The persistent growth in Chinese coal demand, including for power generation, goes to show that coal remains the baseload of China’s power system to back up the surge in renewables and will stay such for years to come as power demand jumps with the increasing electrification of homes and transport.By Tsvetana Paraskova for Oilprice.com
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