Coal shipments from Russia to China are on the rise, although overall shipments to China have fallen, according to new data from S&P Global Market Intelligence.
Russia’s marine coal shipments to China rose 55 percent to 6.2 million tons in the first 28 days of June from a year earlier, according to S&P’s Commodities at Sea database. In May, Russian maritime supplies to China also increased by 20% year-on-year to 5.5 million tonnes.
Domestic production in China has also increased. The latest figures from China’s National Statistics Service show that between January and May, crude coal production increased by 10.4% year-on-year to 1.81 billion tonnes, while imports fell to about 96 million tonnes – down 13 per cent. , 6% compared to a year ago.
“Despite lower demand and higher domestic coal production, China has been buying significantly more Russian coal since May 2022,” S&P Global Market Intelligence Deputy Managing Director Pranay Shukla told CNBC.
“This is due to the fact that Russia has offered very large discounts in relation to international coal prices.”
Russia is a major global producer and exporter of coal. But after its invasion of Ukraine, Moscow has been forced to sell coal at a discount after countries such as Japan banned Russian imports.
“Total coal imports to mainland China were lower due to reduced demand due to the implementation of the lockdown in accordance with the strict” zero COVID “policy,” Shukla said.
“In addition, record international coal prices were responsible, as well as the increase in domestic coal production in China.”
Similarly, S&P data showed that Russian coal shipments to China in March fell by 40% year-on-year as Omicron cases occurred in China before recovering in April as Russian coal rebates began.
Overall, S&P Global Market Intelligence expects global coal shipments from Russia to increase in the second quarter, along with shipments from Indonesia, another major coal exporter.
Separately, Shukla said all eyes would now be on China to see if it would increase coal imports as the economy reopens and travel restrictions due to the coronavirus ease.
China’s higher demand for coal could push coal prices up, adding to already rising global inflation.
“The market will closely monitor third-quarter demand from China, as an increase in demand here could see international coal prices rise to unimaginable levels,” Shukla said.
Chinese customs figures show that Indonesia, Russia and Mongolia are now the top coal exporters to China, with Australia, once the largest supplier, being displaced after China imposed Australian coal restrictions in 2020. .
Source: Capital
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