PC: The Economic Times

China bought inexpensive coal while Western nations avoided Russian cargoes due to Russia’s invasion of Ukraine, causing China’s coal imports from Russia to increase by 14% in July from a year earlier to their highest level in at least five years.

According to information released on Saturday by the General Administration of Customs, China imported 7.42 million tonnes of coal from Russia last month. Since comparable numbers were first collected in 2017, that number has increased from 6.12 million tonnes in June to 6.49 million tonnes in July of the following year.

Prior to the European Union’s ban on Russian coal, which went into effect on August 11 and was intended to cut down on the Kremlin’s energy revenue as retaliation for its February invasion, Western nations avoided cargoes from Russia.

Due to the embargo, Russia is now forced to offer at a significant discount to customers in China and India.

On a cost-and-freight basis, Russian thermal coal with a heating value of 5,500 kcal traded about $150 per tonne in late July, whereas coal of the same quality in Australia’s Newcastle port was valued at more than $210 per tonne on a FOB basis.

When utilities in northern China stock up for the winter heating season, some Chinese dealers anticipate an increase in the flow of Russian coal into China in the fourth quarter.

There were 11.7 million tonnes of coal shipments from Indonesia in July, the majority of which was inexpensive, subpar thermal coal with a heating value under 3,800 kcal. Although it was up 22% from June, it was down 40% from the previous year.

In recent months, China has cut its overall imports of coal due to rising domestic production.

Since Indonesian coal is less expensive than domestic coal and a record heat wave has raised demand for coal-fired power generation, power plants in southern China have expanded their tenders to acquire Indonesian coal in August.

Last week, Indonesian thermal coal with a 3,800 kcal heating value traded hands at about $78 per tonne on a FOB basis, which, when transportation costs are taken into account, would still be less than about 690 yuan ($101) for domestic coal.

According to China’s customs records, Australia shipped no coal in July.