Tuesday 29th November 2022 Font size:

China Buys Cheap Coking Coal From Russia as World Shuns Moscow

Wednesday, April 20th, 2022

Steam rises from hot coke in freight wagons ahead of shipping at the Moscow coke and gas plant, operated by Mechel PJSC, in Vidnoye, near Moscow, Russia, on Monday, Jan. 24, 2022. Russia will look to cut its ambitious goals for boosting coal production in the coming decade and consider imposing a carbon tax or other regulation in the wake of the deals reached by major powers at the COP26 summit in Glasgow, according to officials familiar with the plans.

China more than doubled imports of steel-making coal from Russia in March, procuring the fuel at a discount as other nations move to ban deliveries due to the war in Ukraine. 

Coking coal imports from Russia jumped to 1.4 million tons in March, compared to 590,000 tons for the same month last year and 1.1 million tons in February, according to Chinese customs data. Imports of thermal coal, used for power generation, fell as mild weather curbed demand and China boosted domestic output.

China is taking advantage of steep discounts to Russian coal, as other buyers — like Japan and the European Union — move to ban imports of the fuel. While Russian coal prices increased modestly in the last year, they’re still well below rates from other suppliers, like Indonesia and Mongolia.

Asia’s biggest economy has signaled that it is interested in purchasing more Russia energy despite roadblocks from international banks and shipowners after the invasion of Ukraine.

While China is moving to drastically increase domestic coal output, the nation’s mines produce fuel that is low quality and unsuitable for steel mills. That means steel-makers are still dependent on overseas suppliers for coking coal.

Other March data released on Wednesday showed:

  • Coal imports, including both thermal and coking coal, from Russia fell ~31% y/y to 3.1 million tons in March
    • ALSO: China’s Coal and Gas Boom May Help Ease The Global Energy Crisis
  • LNG import from Russia declined ~2% y/y to 321,000 tons in March
  • Pipeline gas imports from Russia weren’t reported for the previous three months
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