Mongolian coal to sustain China market shares, despite recent slowdown

2017-09-07 18:36:00 Viewpoint,  Import & Export

Mongolia coal is expected to sustain or even grow its market shares in China this year, despite recent slowdown caused by prolonged customs clearance at border crossings, said W. K. Chan, vice president of Fenwei Energy Information Services Co., Ltd., at the 7th Coal Mongolia 2017 on September 7.

"The Chinese overcapacity reform and safety restrictions will continue to limit China’s own production. Increasing local demands can only be met with more imports," Chan said in an opening remark for the conference that co-organized by Fenwei and Mininfo LLC in Ulaanbaatar.

Export of coal in Mongolia has been increasing in past years and most of them go to China. Last year, 40% of China's total coking coal imports was from Mongolia. Mongolia is the second largest coking coal supplier to China, just behind Australia, Chan said.

Ganqimaodu border crossing, the most important window for China to import coal from Mongolia, has received a total of 12.92 million tonnes of coal by September 4 this year, beating its total imports in 2016.

However, prolonged customs clearance at the border crossing since mid-July has slowed imports of Mongolian coal into China. The August shipment may go down further from less than 1.7 million tonnes in July when the Naadam Festival reduced exports.

China and Mongolia have been actively communicating on the backlog. If can't be well addressed soon, it may impact coal export to China in the rest months of the year.

Sources said 500-600 coal trucks are allowed enter into the border crossing each day, nearly one third of the normal level. It takes 10-12 days for a truck to make a turnover from mine to unload coal at the crossing and back to mine, much longer than the normal which takes three days or so.

Mongolia is spectacularly rich in coal resources, with proven reserve totaling above 37 billion tonnes. The country has a lot of good quality coking coal that features low sulphur, low ash and strong caking index and is easy to wash, very suitable for producing high quality metallurgical coke used in the steel sector.  

The current high prices of coking coal benefited most of the Mongolian miners. Premium Australian hard coking coal prices spiked to $220/t CFR north China port on September 1, surging $37.2/t from the start of August, showed data from

"While everything looks positive for Mongolian coal industry, we also see some challenges ahead," Chan pointed out.

"To further increase export, Mongolian coals need to be more competitive in the international markets. For example, you need to improve your productivity, lower your production cost and build international brands," he said.

Besides, "infrastructure remains the major hurdle for Mongolia to expand its market share in and beyond China," the vice president said.

"If logistics cost goes down with the operation of railway to Chinese border, Mongolian miners would see a significant improvement on their profit margin and competitiveness," he added.

Such view was also made by G. Battsengel, CEO of Mongolian Mining Corporation, one of Mongolia's biggest coal miners.

Noting transportation and logistics bottlenecks need to be fixed by completing required infrastructure, Battsengel said better connections to railway networks would help Mongolian coal reach end-users in China.

In the longer term, Mongolian coals have to become more cost competitive to vie with lower-cost Australian supply, Battsengel said.

This is especially so when Chinese end-users do not need to pay 3% import duties for Australian coking coals due to a bilateral FTA, which Mongolia does not have with China, he noted.

(Writing by Alex Guo   Editing by Harry Huo)
For any questions, please contact us by or +86-351-7219322.

Editors Recommendations

1 Weekly global coal market news summary (Sep 18- Sep 22) 2017-09-22

World energy consumption to grow 28% by 2040, EIA The U.S. Energy Information Administration's (EIA) recently released International Energy Outlook 2017 (IEO2017) projects that world energy c

2 Weekly China coal market news summary (Sep 18- Sep 22) 2017-09-22

China's NDRC calls for output and transport boost to ensure coal supply China's National Development and Reform Commission (NDRC) on September 20 called for relevant authorities to boost pro

3 Exorbitant import coal prices hinder Chinese buyer interests 2017-09-22

Chinese traders and power producers were sacred away by exorbitant thermal coal prices offered by Indonesian and Australian miners, despite an ongoing supply crunch that have pushed up domestic prices

4 Global crude steel Aug output up 6.3% on yr, Worldsteel 2017-09-22

Crude steel production for the 67 members of the World Steel Association totaled 143.6 million tonnes in August, growing 6.3% from a year ago and almost flat from the month prior, showed data from Wor

5 Heihe port reopens to Russian coal after 6 yrs 2017-09-22

Heihe port, the northeastern most point of China's Heilongjiang province, resumed import of coal from neighboring Russia after a lapse of six years, sources from Heihe Inspection and Quarantine Bure

6 Hebei steel makers slow down coke buying as stocks increase 2017-09-22

Steel producers in Hebei, China's top steelmaking province, have slowed down purchase for coke, after their stockpiles increased to a moderate level in the wake of recent intensive restocking, sour

7 China set for world's largest clean coal power system by 2020 2017-09-22

China is expected to boast the world's largest clean coal power system with high efficiency by 2020, the Xinhua-run Economic Information Daily reported on September 20. Since 2014, the co

8 China thermal coal supply tension remains as rail wagons hard to get 2017-09-21

Despite several official directives issued earlier urging coal miners to expand production, supply of thermal coal remained tight in China, with traders reporting difficulties in securing railway capa

9 China CTO industry growth beset with difficulties 2017-09-21

With rapid development these years, China's coal-to-olefin (CTO) sector is undergoing a bottleneck period. Companies that used to make a killing from CTO projects have been almost unprofitable now.

10 China thermal coal price soars high, beating market expectations 2017-09-21

Prices of thermal coal, used mainly for power generation, continued to fly high in September, after recovering from a brief decline that ended in late August, beating market expectations of a weake

Most Read Articles

1 Mongolian miners plan coal output hikes as China demand rises 2017-09-12

Mongolia's coal miners are looking to ramp up production to meet growing demand from top buyer China, but longstanding transportation issues continue to hold back sales, Reuters reported on September

2 Coal supply for power plants to improve over 15-20 days 2017-09-11

In view of current coal shortage in the power plants, the supply of the fossil fuel would improve over the next 15-20 days, IANS reported on September 9, citing the Union Railways and Coal minister Pi

3 Shanxi to shut first batch of coal-fired power capacity of 840 MW this yr 2017-09-11

Coal-rich Shanxi province publicized the first batch of coal-fired power plants to be shut in 2017, totaling 840 MW, said an official notice. The move, involving five power companies, is

4 China coking coal on track for worst day since contract launch 2017-09-15

China's coking coal futures plunged almost 8% in afternoon trading on September 15 and were on track for their biggest one day drop since the contract's launch in 2013 on chart-based selling amid worr

5 China iron ore, steel rebound after five-day slide 2017-09-12

Steel and iron ore futures in China advanced on September 12, regaining some lost ground after a five-day retreat, with demand seen remaining intact in the world's top consumer of both commodities.

6 China spends big to ensure clean winter heating in N. China 2017-09-11

Chinese central and local governments are committed to huge spending in the coming three years to ensure clean winter heating in 12 cities in northern China. Those cities, including Shiji

7 24 coal cos ranked on list of China's top 500 companies in 2017 2017-09-12

A total of 24 coal enterprises are ranked on the list of China's top 500 companies this year, two less than a year ago, showed the list on September 10 published by China Enterprise Confederation (CEC

8 Northeast China's largest solar power farm comes online 2017-09-12

A 100-MW floating photovoltaic (PV) power project was reported to be connected to gird recently in Zhuanghe city of Liaoning province, marking the largest solar power plant in northeastern China ha

9 China releases guideline to support reform of coal-rich province 2017-09-12

China's State Council made public a guideline to support the economic transformation of coal-rich Shanxi province, Xinhua News Agency reported on September 12. By 2020, the share of coal

10 Inner Mongolia thermal coal prices edge up in Aug 2017-09-12

Thermal coal prices increase slightly in northern China's Inner Mongolia last month, said the regional development and reform commission. In August, thermal coal mine-mouth prices average