Mongolian coal to sustain China market shares, despite recent slowdown

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

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 sxcoal.com.


"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 inqury@fwenergy.com or +86-351-7219322.

Editors Recommendations

1 Inner Mongolia power output up 12.01% YoY in 2017 2018-01-17

Utilities with capacity of 60 GW and above generated a total 442.23 TWh of electricity in northern China's Inner Mongolia autonomous region last year, up 12.01% from a year ago, data showed from Inner

2 China scraps pollutant charges and levies environmental tax instead 2018-01-17

From January 1, China have stopped pollutant charges and started to levy environmental taxes instead, announced by Ministry of Environmental Protection and other three departments on January 16.

3 China rail coal capacity expected to stay tight in 2018 2018-01-17

China's rail coal capacity is expected to stay tight on the whole in 2018, as newly-added coal supply will add to transport shortage accordingly. The rail coal shipment is likely to excee

4 Chinese co looking for new natural gas sources in Myanmar 2018-01-17

A subsidiary of China National Petroleum Corp (CNPC), the country's largest oil producer, is seeking for new sources of natural gas in Myanmar to feed a pipeline that transport gas between the two cou

5 Steel makers further slash coke purchase price in Hebei and Shandong 2018-01-17

Some steel makers in Hebei and Shandong provinces reduced coke purchase price by 100 yuan/t, adding up to price drop of 150 yuan/t since early this month, sources said. After the pr

6 10,000-tonne heavy-haul coal train runs on Wari railway 2018-01-17

Rail authorities put 10,000-tonne heavy-haul coal-dedicated trains into service on Wari (Watang, Shanxi – Rizhao, Shandong) railway on January 16, said China Railway Corporation. The move

7 Shanxi 1st HDR geothermal heating program makes sound success 2018-01-16

The first hot dry rock (HDR) geothermal heating program has made sound success in capital city Taiyuan of coal-rich Shanxi province, China's state media reported on January 16. "Compared

8 China's Guizhou to phase out 300-MW-below coal-fired power units in 2018 2018-01-16

Southwestern China's Guizhou province plans to eliminate all coal-fired power generation units with capacity below 300 MW in 2018, to leave capacity room for clean thermal ones, said the provincial en

9 China imported a record amount of iron ore in 2017 2018-01-16

Hunger for high-quality iron ore from Australia and Brazil pushed Chinese imports of the steelmaking ingredient to a record high in 2017. While shipments were down 11% in December, the fu

10 China thermal coal price likely to cool down before Chinese New Year 2018-01-16

China's red-hot domestic thermal coal market is likely to cool down before China's traditional Lunar New Year, as demand may gradually come down before and during the festival, a similar pattern to th

Most Read Articles

1 Indonesian coal prices move higher on active Chinese tenders 2018-01-08

Indonesian coal prices climbed higher on the back of intensive tenders from Chinese utilities, with Supramax 3,800 Kcal/kg NAR cargoes being offered at $49/t FOB, trade sources said. One

2 Five more Shanxi-based miners cut thermal coal prices 2018-01-11

Five more state-owned large coal miners in northern China's Shanxi province announced price cuts of 15-20 yuan/t, in an effort to rein in too fast growth in prices of the power generation fuel in the

3 Indonesia's Jan HBA thermal coal price up 10.8% YoY to $95.54/t 2018-01-08

Indonesia's Ministry of Energy and Mineral Resources set its January thermal coal reference price, also known as Harga Batubara Acuan or HBA, at $95.54/t, up 10.8% year on year.

4 China issues stricter rules on building new steel capacity, industry ministry 2018-01-08

China has issued stricter rules on building new steel production capacity to replace obsolete facilities, the Ministry of Industry and Information Technology said on January 8. C

5 China authority prioritizes coal and gas shipment 2018-01-09

China's Ministry of Transport will prioritize transport of coal and natural gas this winter to avert energy crisis in peak demand heating season, state-owned media reported. Ports and mar

6 China Dec coal imports up 3.13% on mth 2018-01-12

China imported 22.74 million tonnes of coal in December, down 15.28% from a year ago but up 3.13% from November, showed data from the General Administration of Customs on January 12. That

7 Coal stocks ramp up at Guangzhou port, possibly related to import curb lift 2018-01-10

Coal stocks have been jumping up at southern China Guangzhou port recently, following the country relaxed coal import limits late last month. China's top economic body Nati

8 Yangquan Coal cuts thermal coal prices at N. China ports 2018-01-11

China's leading coal miner Yangquan Coal Industry Group lowered FOB prices of thermal coal at northern ports by 15 yuan/t effective January 10, its sales company said in a statement on the same day.

9 China's Govt releases policy to ensure zero growth of capacity in major industries 2018-01-09

The government has released new policy to ensure zero growth of production capacity in steel, cement and plate glass industries and to continue capacity replacement measures this year, Economic Inf

10 China's NEA set to hold conference on coal import policies 2018-01-08

China's National Energy Administration is set to hold a meeting early January 9 with major power generators on influences of easing coal import restrictions, as well as issues on coal supply from dome