According to data from Chinese customs published on Monday, the volume of coal imports from Mongolia to China reached a historic high in September. This is linked to Beijing's efforts to reduce excess capacity, which has contributed to rising domestic prices and prompted traders to seek more affordable supply sources.
In September, Mongolia sent 9.29 million tons of coal to China. This is 33% more compared to the same period last year and the highest figure since customs reporting began in 2015.
Recently, China has imposed restrictions on coal production due to an unexpected surge in supply in the first half of the year, which has put pressure on prices. This is seen as part of the "anti-involution" policy aimed at curbing excess capacity and reducing unsustainably low prices across various sectors of the economy.
As a result, domestic prices for thermal coal have reached their highest level in the past eight months. Since the beginning of July, futures prices for coking coal, used in the steel industry, have increased by 30%.
Simon Wu, a senior coking coal consultant at Wood Mackenzie, noted that this situation opens new opportunities for low-cost exporters from Mongolia.
“Mongolia, as a neighboring country, benefits from short logistics and is rapidly increasing its market share,” added Wu.
Firat Ergene, a leading coal analyst at the Kpler platform, emphasized that Mongolian coal is also in demand due to the "incentive for diversification." Coal imports from other countries, such as Australia and the USA, have faced difficulties due to trade tensions in recent years.
“I believe that Mongolian coal can meet the needs for a reliable long-term supplier,” he noted.
Coal imports to China from Indonesia, the leading supplier, also reached a nine-month high in September, after Indonesia abandoned the requirement to use a state price index that was unpopular among traders.
Year-on-year, coal imports from Indonesia increased by 1% to 21.48 million tons.
Below are the coal import data to China from the four leading suppliers (in metric tons):
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source: MiddleAsianNews
