Page 8 - AsiaElec Week 27 2022

AsiaElec COAL AsiaElec

China-bound Russian coal

shipments up by over 50% in June

CHINA COAL shipped by sea from Russia to China was Shukla in an interview with Greece-based Hel-
up a reported 55% across June as Beijing looks to lenic Shipping News.
reap the benefits of significant discounts offered “Overall coal imports into mainland China
by Moscow in the wake of aggression against were lower due to reduced demand due to the
Ukraine. implementation of lockdown in line with the
A month earlier, figures released by S&P strict ‘dynamic Zero COVID’ policy,” Shukla
Commodities at Sea Database saw an increase said.
of 20% in May, to 5.5mn tonnes year on year. Another nation long reliant on sales to China,
The previous three months had seen slight Australia, meanwhile could now see exports
declines in imports of coal by sea from Russia as nosedive over the next few years.
importers across China reacted to government On the back of 2020 restrictions on imports
efforts to boost domestic production numbers. of Australian coal, Beijing has finally cleared a
On the home front. figures released by Chi- long-standing backlog totalling $1bn. At one
na’s National Bureau of Statistics indicate that point an estimated 50 large-scale coal vessels
the January-to-May period saw domestic pro- were waiting to be offloaded at Chinese ports
duction of raw coal climb over 10% y/y to just due to a diplomatic spat between Beijing and
over 1.8bn tonnes. Canberra.
At the same time, however, total imports More than 14mn tonnes of backlogged Aus-
decreased to 96mn tonnes. This is a figure down tralian coal has now cleared Chinese customs,
almost 14% y/y even with the recent increases in though.
imports of Russian coal by sea. And, despite a thaw in bilateral relations,
According to Pranay Shukla of S&P Global inventory figures in China coupled to cheap
Market Intelligence, the current increase in Russian supplies seemingly on-tap look likely to
imports “is because Russia has been offering nix any return to high levels of Australian coal
very steep discounts on prevailing international imports in the near future.
coal prices.” As such, specific types of coal, notably coking
“Despite lower demand and higher domes- coal used in the production of Chinese steel, may
tic coal production, China has been buying sig- prove crucial to Australia once again unlocking
nificantly higher Russian coal since May 2022,” the door to one of its key markets.
Shukla added in an interview with CNBC. “There may be some demand for the very
Further discounts on Russian coal are not high-quality coking coal in the medium term
being ruled out in East Asia, with exporters in and certainly the longer term, but right now I’m
Indonesia, like Russia, one of China’s top two not sure the Chinese would be keen to pay cur-
overseas suppliers, watching to see just how low rent prices given how weak the steel market and
prices will go. steel margins are,” said commodity strategist at
Unlike Indonesia, Mongolia-based exporters Astris Advisory KK Japan Ian Roper, with man-
reliant only on rail shipments are likely to be less aging director at Navigate Commodities, Atilla
affected by fluctuations in Chinese imports of Widnell, adding “China will likely have one eye
Russian coal. on captive cheap Mongolian and Russian low to
COVID and large-scale lockdowns by Beijing mid-range coking coals, while keeping an eye on
for much of the spring months prior to May did more attractive prices for premium Australian
have an effect; something acknowledged by Mr. material.” ™

P8 www. NEWSBASE .com Week 27 06•July•2022