SteelMint Events

Tag: Asia

  • Russia: Coking coal exports rise nearly 50% in 2022 on higher shipments to China, India

    Russia: Coking coal exports rise nearly 50% in 2022 on higher shipments to China, India

    Russia’s seaborne exports of coking coal and PCI coal are estimated to have increased by a sharp 48% y-o-y to 47 million tonnes (mnt) in 2022 from around 32 mnt in 2021, as per provisional data maintained with CoalMint. Although sanctions on Russia cut off seaborne supplies to traditional importers such as the EU, Japan and South Korea, increased exports to China and India contributed to the growth in export volumes.

    The EU has hitherto been heavily dependent on imports of Russian coal, which accounted for 46.7% of all EU imports of solid fuel last year, according to Eurostat data.

    Leading importers

    Russian PCI and coking coals saw stronger demand in China, and also into India, trading at prices lower than for alternative coals from Australia and North America.

    Data reveal that Russia’s met coal exports to China increased by nearly 100% y-o-y to over 21 mnt in the year gone by. Despite China’s crude steel production falling around 2% y-o-y in 2022 and relatively low domestic coal prices due to extensive COVID-induced lockdowns, imports from Russia surged due to high discounts offered by Russian suppliers post imposition of trade sanctions.

    Russian met coal exports to India edged up even more sharply by over 140% y-o-y to 9.3 mnt. The country’s crude steel production increased by 6% y-o-y to over 124 mnt in 2022 while coking coal imports were stable at around 70 mnt. Cheaper Russian cargoes were lapped up by Indian coal importers amid high global coal prices following the outbreak of the Russia-Ukraine war.

    On the other hand, Russia’s exports to traditional markets such as Japan and South Korea fell by 40% and 59%, respectively amid sanctions.

    Moreover, the ban on the transport of Russian coal was amended in September and allowed for the provision of services like shipping, financing and insurance needed to transfer coal and other products by ship to destinations outside the EU in order to alleviate the energy crisis worldwide. Since then Russia’s seaborne coal exports jumped sharply, with many of the shipments going to Asia.

    Outlook

    Russia’s production of met coal increased by 4.5% to 105 mnt in 2022, as per Rosstat data. However, higher export shipments may not be possible due to logistical bottlenecks. Cancellation of discounts on coal freight levied by the RZD may exert pressure on suppliers to curtail discounts. Also, China’s lifting of an unofficial ban on Australian coal imports, higher shipments by Mongolia and enhancement of domestic production are likely to affect China’s imports of Russian coal.

    However, Russian suppliers looking to ramp up exports to China know that higher discounts are likely to increase the attractiveness of Russian cargoes, even for Indian buyers. Going forward, India’s coking coal demand is likely to increase and – quality considerations apart – if Australian supplies become costlier post China’s re-entry into the Asian seaborne met coal market, Indian buyers may have to fall back on Russia.

    2nd Asia Coal Trade Summit

    Will Russian met coal exports to Asia increase in 2023? How will trade dynamics pan out with the continued sanctions on Russian exports? How is Russia gearing up to consolidate its logistical networks to channel increasing volumes to Asian buyers in the coming years? For in-depth insights on such pressing issues and more, sign in for CoalMint’s 2nd Asia Coal Trade Summit to be held in Bangkok, Thailand on 24-25 April, 2023

  • How might Asian coal trade dynamics change if China lifts ban on Australian coal?

    How might Asian coal trade dynamics change if China lifts ban on Australian coal?

    Australia’s Foreign Minister Penny Wong met with her Chinese counterpart Wang Yi in Beijing on 21 December, 2022, as the trading partners seek to stabilise their diplomatic relationship. Wong’s visit is the first by an Australian minister since 2019 and the first formal talks in Beijing since 2018.

    It is widely expected that a thaw in the bilateral relationship will have a positive outcome for trade. If market chatter is anything to go by, the possibility of China lifting its informal embargo on a host of Australian exports, most prominently coking coal, is by no means remote.

    China had levied an informal ban on its top coal sourcing destination in the latter half of 2020 as tensions escalated between the two trading partners over a series of issues. China was one of the leading coal importers from Australia till 2019 with the latter exporting about 25% of its total coal (both thermal and coking) exports to China.
    As relations between the two countries are heard to be improving, speculation is rife that coal trade might resume once again.

    China-Australia trade dynamics: how it changed?

    Australia accounts for 58% of global seaborne trade in metallurgical coal, while China, the world’s largest steelmaking hub, accounts for 55% of global steel production.

    China imported 197 million tonnes (mnt) of coal in 2019 (before the informal ban), of which 40% was imported from Australia. Commodity-wise, Australia’s share in China’s coking coal imports stood at 40%, while for thermal coal it was 60%.

    Post 2020, China focused on increasing its domestic coal production. Compared to 2019, China’s domestic coal production jumped 20% to 4,452 mnt in 2022.

    While imports continue to arrive in China, the absence of Australian cargoes has been filled by met coal imports from the US, Canada and Russia. For thermal coal, imports from Indonesia, Russia and Colombia increased substantially.

    Interestingly, the share of Russian coal in Chinese imports increased noticeably after the Russia-Ukraine war earlier this year and subsequent sanctions imposed by European countries.

    Russia’s share in China’s total coal imports have gone up to 22% this year against 10% in 2019 and 12% in 2022. Chinese buyers favour Russian coal for its high quality and low prices.

    What might happen if China-Australia trade resumes?

    As per CoalMint analysis, even if trade resumes between the two countries the situation is unlikely to revert to what it was in 2019.

    This is because the Russia-Ukraine war has changed global coal trade flows. With sanctions on Russia by a majority of western countries and a few Asian ones too, Russian coal is being diverted to China at much cheaper rates.

    On the other hand, Australian coal has found favour in key economies such as Europe, Japan, and South Korea. This has resulted in Australian coking and thermal coal prices trending at high levels. Australian thermal coal prices are still elevated by about 24% as against January this year.

    While global steel and thermal coal demand remains slow at present due to Covid and recessionary pressure, in the long run if Australian coal miners are hoping for Chinese buyers to make a return to the market, their hopes are likely to be dashed. Given the fact that Australian coal is massively uncompetitive against its rivals coupled with the fact that China is raising its domestic output, it is uncertain whether Australian coal exports to China will resume in a big way.

    Asia Coal Trade Summit 2023

    Keen to attain insights on Asian coal trade flows and the emerging demand-supply dynamics in the continent? How may China’s coal demand pan out in the near term and what factors are likely to shape met coal trade flows in 2023? Sign in for CoalMint’s Asia Coal Trade Summit to be held at Bangkok, Thailand, in April 2023