LAUNCESTON, Australia, Oct 4 (Reuters): China's coal import data for August flung up an interesting anomaly in the form of renewed imports from North Korea, but of far more interest is the surge in cargoes from Russia.
Customs data showed that China imported 1.6 million tonnes from North Korea in August, the first allowed since February when Beijing tightened sanctions against its neighbour as part of international efforts to restrict the isolated dictatorship's nuclear weapons programme.
While this generated media headlines, it's likely nothing more than a blip as Beijing had already said it would allow North Korean cargoes stranded at Chinese ports by the sanctions to be cleared.
What is more interesting is how Russia has effectively supplanted North Korea as a supplier of relatively good quality coal to China.
China's imports from Russia were 2.47 million tonnes in August, taking the year-to-date figure to 17.25 million tonnes, a gain of 41 per cent over the same period last year.
That equates to about an extra 5 million tonnes from Russia so far this year, while imports from North Korea have dropped by just over 10 million tonnes.
North Korean coal is classified by Chinese customs as anthracite, a grade of coal that doesn't have quite enough energy content to be coking coal, used for steel making, but is generally of higher quality than most types of thermal coal used for power generation.
China generally used North Korean coal for industrial applications and for blending with lower quality coals for power generation.
The industrial applications include sintering, a process of improving the feedstock quality of iron ore before it is placed in a blast furnace, and to make ceramics.
As North Korean imports of anthracite coal have waned with sanctions, those from Russia have soared.
Imports of Russian anthracite were 4.5 million tonnes in the first eight months of 2017, a gain of 212 per cent from the same period last year.
Australia, the world's largest coal exporter, also managed to snare a bigger share of anthracite, but its January-August total of 869,916 tonnes, while up 45 per cent from the same period a year ago, is only one-fifth of what Russia has supplied.
Price is undoubtedly a factor, with Russian anthracite having a landed price in China of $101.25 a tonne, well below the $129.71 of Australian cargoes.
Price is also likely a factor in the other area of Russia's coal success in China, namely coking coal.
Chinese imports from Russia have jumped 108 per cent to 3.14 million tonnes in the first eight months of 2017 from the same period a year ago, with the August landed cost at $119.96 a tonne.
This is well below the $153.12 a tonne for Australian cargoes, although Australia remains the dominant supplier to China with a January-August total of 20.16 million tonnes, up 7.6 per cent from the same period last year.
Mongolia has also made inroads into China's market for coking coal so far this year, with imports totalling 17.92 million tonnes for the first eight months, up 40.2 per cent from the same period last year.
Where Russia has been less successful in China is in what customs terms non-coking bituminous coal, which is thermal coal of a higher quality than low-rank lignite.
Russia takes advantage of China’s North Korea coal ban: Analyst
FE Team | Published: October 05, 2017 00:46:27 | Updated: October 23, 2017 10:57:36
Russia takes advantage of China’s North Korea coal ban: Analyst
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