Shipments of Mongolian coking coal to China have been challenged as a second wave of COVID-19 virus appeared in the landlocked country that has triggered strict measures on China's border administration.
Ganqimaodu, a major border crossing for Mongolian coal trucks heading into China, advanced the deadline of customs clearance from previous 5o'clock p.m. to 12o'clock a.m. every day. Drivers are no longer allowed to stay overnight in China and they need to provide nucleic acid detection report when they arrives.
The Mongolian government has imposed a national lockdown that will last until December 1 after reporting its first community transmission on November 6. As of November 23, there were 32 new cases in the past 24 hours, taking the total confirmed number to 640.
While the coal market now is still on the lookout for the potential border shutdown, the supply shortage has been looming large. Now, the inventory at Ganqimaodu has declined to only 1 million tonnes, much lower than the average. On concerns of uncertainty of customs clearance, Chinese traders have increased purchases recently, which intensified the supply situation.
The shortened customs clearing slowed down the process and caused congestion at the crossing, triggering a higher transport cost, with the shipping rate from Tsagaan Khad to Ganqimaodu up 10-20 yuan/t late last week to 160 yuan/t.
The supply shortage fueled a price rise in the market. Offers of Mongolian 5# unwashed coking coal increased 30 yuan/t to 870-900 yuan/t at Ganqimaodu, ex-stock with VAT.
As of November 23, Fenwei assessed Mongolian 5# unwashed coking coal at 860 yuan/t, 10 yuan/t higher than a week ago and 30 yuan/t higher than a month ago; Mongolian 5# washed coking coal was assessed at 1,060 yuan/t, up 20 yuan/t week on week and 30 yuan/t month on month.
(Writing by Alex Guo Editing by Harry Huo)
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