Cases of coal smuggling frequently appeared in China recently, driven by huge profit as the price spread reached up to 200 yuan/t between imported and domestic coal.
Within only one week in mid-July, the Shanghai maritime police has detected four coal smuggling cases, with the amount exceeding the total found in similar cases in the first half of this year.
State media reported the maritime police uncovered four coal smuggling cases in the Yangtze estuary in July 11-16, totaling 31,200 tonnes.
It is the temptation of high profits that makes criminals take risks. Data from sxcoal.com showed when the price of 5,500 Kcal/kg NAR thermal coal reached 570 yuan/t FOB northern ports in mid-June, Australian cargoes with the same calorific value were already 200 yuan/t cheaper, even on a CFR basis.
The price spread once peaked about 250 yuan/t on July 10 and now drops to 220 yuan/t or so.
Coal smuggling will not only disrupt the market order, but could cause environmental pollution as smuggled coal's ash, sulfur and other toxic substances are always above the country's standards.
While overseas coal is much cheaper than domestic coal, trading activity is not active in the import market, given the strict import restrictions. Currently, as the domestic supply is enough to cover the demand over the summer peak demand period, it is less likely that the authorities will loosen the restrictions.
(Writing by Alex Guo Editing by Tammy Yang)
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