Chinese Coking Coal: Slow restart to Mongolian coal imports

Mongolian coal deliveries via the Ganqimaodu (Gands Mod) checkpoint in North China's Inner Mongolia - a crucial conduit for Chinese imports of Mongolian coal - have slowed since the customs post reopened on October 7, the last day of China's National Day break from October 1, according to Mysteel.

"Customs clearance of coal at Ganqimaodu has dropped to 400 trucks/day, as there is very little room left for coal stocks at the checkpoint," observed a Shanghai-based market watcher on October 9.

According to new regulations to Ganqimaodu, from this year the processing of raw coal imported from Mongolia via the checkpoint must be completed at the coal processing plants close to the checkpoint before the coal is transported to users across China. This may be the reason for coal deliveries from Ganqimaodu to slow, he explained, but further accelerating the increase of coal stocks is the weakening demand for coal in China recently, he added.

According to Mysteel's survey, though the clearance of coal trucks at the Ganqimaodu checkpoint averaged 957 trucks per day throughout all of September, from the early part of last month until mid-September, more than 1,000 trucks a day were negotiating the checkpoint but by month's end, the number had fallen to 700-800 per day.

"The issue (of rising coal stocks at Ganqimaodu) has become obvious since last month," commented an analyst in Beijing. "And even though the checkpoint was closed for four days, this was not long enough to help ease the heavy stocks pressure."

Most coke makers in North China including those in Shanxi and Hebei provinces had cut their coke output from late September to early October to reduce pollutant emissions over the holidays, as reported. The transportation of coking coal to coke plants and steel mills was also impacted.

Mongolia-origin coal was not the only coal affected. Imported coal stocks at major Chinese ports and inventories of domestic coal at coal producers also increased over the break, because of restrictions on the use of heavy-duty trucks as another anti-pollution measure.

As of October 10, Mysteel's price for Mongolian coking coal with 11% ash and 0.7% sulphur had dropped by another Yuan 20/tonne ($2.8/t) on month to Yuan 960/t including the 13% VAT, a new two-year low.