Higher coal cost expected as Mongolia wants to dial up export prices

Photograph taken on Dec. 22, 2020 reveals a thermal coal yard of Huanghua Port in Cangzhou Metropolis, north China’s Hebei Province. Photograph: Xinhua

Mongolia’s reported transfer to change how its coal exports to China are priced could imply greater prices for Chinese language customers, and Chinese language trade specialists mentioned that efforts by Mongolia to alter the ecosystem of cross-border coal commerce could have an effect on the outlook for Mongolian power export to China.

Chinese language coal merchants on the China-Mongolia border mentioned they’d heard concerning the intention of the Mongolian facet to promote coal at ex-border costs as a substitute of mine-mouth costs ranging from February 1, citing an govt of Erdenes Tavan Tolgoi (ETT) JSC. Tavan Tolgoi is a large coal mine in Mongolia about 200 kilometers from the Chinese language border.

Li Xiang, a consultant of Mengtong Worldwide Logistics Company in North China’s Internal Mongolia Autonomous Area, advised the International Instances on Monday that the transfer could mirror ETT’s aim of accelerating income by altering the pricing.

Li, a veteran aware of the state of affairs of cross-border shipments between China and Mongolia, mentioned that Chinese language coal consumers sending vans to fetch coal from ETT might be affected, however “Mongolia will nonetheless be transport coal to China even when the worth rises to some extent.”

China has ramped up imports of coal from Russia and Mongolia lately. In the course of the first 11 months of 2022, China imported 26.1 million tons of coal from Mongolia, accounting for 10 p.c of whole coal imports, information from metal trade portal Lange confirmed.

Some 21.6 million tons have been coking coal shipments sure for Chinese language metal mills, and the quantity accounted for 37.6 p.c of China’s coking coal imports, which stood at 57.4 million tons through the interval, Lange information confirmed.

Consultants mentioned the potential pricing change will barely dent the enchantment of Mongolian coal however won’t have an effect on China’s general coal provide.

“The transfer, which can end in a value rise, will doubtless curb Chinese language demand for Mongolian coal, however trying on the provide and demand state of affairs, China’s imports of Mongolian coking coal can nonetheless be anticipated to exceed 20 million tons in 2023,” Wang Guoqing, analysis director at Beijing Lange Metal Info Analysis Heart, advised the International Instances on Monday.

Feng Dongbin, analyst from China-based Fenwei consultancy, mentioned the transfer will assist Mongolia to be extra clear on its pricing of coal however he’s not certain if the brand new measure may be carried out within the first quarter because of the pursuits concerned.

Feng famous that the rise in costs might be offset by current declines in highway transportation prices.

China and Mongolia have enhanced the joint constructing of Mongolia’s Steppe Street Program and China’s Belt and Street Initiative. Joint efforts are being made to strengthen the constructing of the China-Mongolia-Russia Financial Hall.

On September 9, Mongolia accomplished the railway part linking the Tavan Tolgoi coal mine to the Gashuun Sukhait port, reverse to the Ganqimaodu port on the Chinese language facet. The 233-km railway may ship as much as 30-50 million tons of coal to China yearly, in keeping with media experiences.

Amid a disrupted international provide chain, the 2 nations’ complementary economies might help one another to beat present challenges, in keeping with specialists.

China bought 780,000 tons of coal from Mongolia in October, surging 830 p.c year-on-year, per information tracked by Shanxi Securities Co.

Mongolian Ambassador to China Tuvshin Badral advised the International Instances in an interview in October that the highway transportation value from Tavan Tolgoi to Ganqimaodu port is about $40 per ton.

Within the first 11 months of 2022, China’s coal imports primarily got here from Indonesia, which accounted for 58.3 p.c of the full. Russia accounted for 23.3 p.c and Mongolia 10 p.c, Lange information confirmed.