China’s July coal imports from Russia rose 14% from one year ago to their highest level in at least five decades. This was because China purchased discounted coal, while Western countries avoided Russian cargoes due to its invasion of Ukraine.
According to data released by the General Administration of Customs on Saturday, China imported 7.42 million tonnes of Russian coal last month. This was the highest monthly total since 2017 when comparable statistics were first established. It was 6.12 million tonnes higher than June 2017, and 6.49 million tonnes more than July 2021.
Prior to the Aug. 11 European Union ban on Russian coal, which was aimed at reducing Russia’s energy revenues after its February invasion, Western countries avoided Russian cargoes.
Russia has been forced to sell at a steep discount after the ban.
Russian thermal coal, which has a heating value exceeding 5,500 kilocalories (kcal), was traded at $150 per tonne cost-and freight basis in July. However, coal of the same quality at Australia’s Newcastle port was valued at $210 per tonne free-onboard (FOB).
Chinese traders anticipate more Russian coal flowing into China during the fourth quarter when northern China’s utilities build stock for the winter heating season.
July’s shipments of Indonesian coke, mostly low-quality, cheap thermal coal with a heat value below 3800 kcal, totalled 11.7 million tonnes. This was 22% more than June, but 40% less than a year ago. China has seen a decline in overall coal imports over the past few months, despite its growing domestic production.
As Indonesian coal is more affordable than domestic, power plants in China increased their tenders for Indonesian coal in August. Meanwhile, record heat waves have boosted demand for coal-fired power generation.
The price of Indonesian thermal coal, with a heating value of 3,800 kcal, was $78 per tonne FOB last week. This would still be lower than the 690 Yuan ($101) local coal when you consider shipping costs.
China’s Customs Data showed that Australia had not shipped any coal to China in July.
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