China border curbs to restrict coking coal supplies

Two of China's closest trading partners Mongolia and Russia plan to restrict border crossings to prevent a further spread of the coronavirus outbreak, which is expected to halt coking coal exports to China.

Border authorities in Mongolia have enforced temporary movement restrictions at its border with China earlier this week. It will grant passage only to foreigners or commercial vehicles with licences from the government.

Traders of Mongolian coal have confirmed that trucks carrying Mongolian coal have not been able to pass into China since the announcement.

Mongolia usually vies with Australia as the largest exporter of coking coal to China, depending on whether rail or seaborne prices are more attractive. China during January-November 2019 imported 30.8mn t of coking coal from Australia compared with 32.2mn t from Mongolia. This trend was expected to continue amid tightened import restrictions imposed on Australian coal imports by Chinese customs officials. China imported 27.8pc more coking coal from Mongolia in 2019 than the 25.2mn t a year earlier.

Russia, with whom China also shares a long border, also announced yesterday the closure of several major highways and rail links bringing people and goods into China. But the halt of Russian coal exports into China will have a far more minor impact on Chinese supplies, with its export volumes usually less than 10pc of China's total coking coal imports.

"The mills in the northeast region of China will be the main ones affected by the border closures with Russia, since they are located closest to the Russian border and are most well placed to take Russian coking coal shipments via rail," a Singapore-based trader said. "But the volumes they take are not too large and should not disrupt supply too significantly either."

By Rou Urn Lee