Mongolia delays opening Chinese border for coal exports

Mongolia has extended its ban on coal exports to China until 15 March amid growing fears of more imported coronavirus cases, backtracking on last week's decision to restart exports on 3 March.

A spike in the number of coronavirus cases in many other countries outside of China this week has fuelled fears that opening the China-Mongolia border for exports prematurely could increase the number of cases in Mongolia.

Some market participants have pointed out that the ban is essentially extended for only two weeks, but others have expressed more scepticism. "It really depends on how this coronavirus outbreak plays out in March," a Singapore-based trader said. "If it gets worse, which it might, then for all you know this ban could be further extended."

Tight supplies of coking coal in Australia, Canada, Mozambique and China have squeezed coal availability in recent weeks. Buyers who find themselves needing a cargo urgently often have no choice but to pay a higher price for imports despite weak overall demand for steel.

But the decreasing number of confirmed coronavirus cases within China this week has allowed many more domestic coal mines to restart production, and domestic supplies are expected to gradually return to normal, Chinese steel producers said.

Mongolia is also an important source of coking coal for China. They were the top exporter of coking coal to China last year with 33.8mn t, providing 45pc of China's total import volumes for 2019 of 74.6mn t, according to Chinese customs data. Mongolian coking coal exports to China increased by 22pc from 2018 as production and infrastructure improved.

Mongolia also overtook Australia for the top exporter of coking coal to China last year. Australia exported 30.9mn t of coking coal to China in 2019, up by 9.6pc from 2018.

By Rou Urn Lee