Posted on 27 May 2022
Trucks laden with Mongolian coal resumed deliveries to China via the border crossing point of Ceke in China's Inner Mongolia on May 25 after truck-traffic was stopped for seven months as part of COVID-related control measures, Chinese market sources confirmed on May 26, adding that the re-opened route is expected to help ease China's coal supply crunch.
Ceke Port, the third-largest land port in Inner Mongolia and a major conduit for China's imports of Mongolian coal including thermal and 1/3 coking coal, was closed from mid-October 2021 under stringent preventive measures implemented by the local government in response to the COVID-19 outbreak, as reported.
However, SouthGobi Resources, an integrated coal supplier helping develop the Ovoot Tolgoi coal mine in South Mongolia's South Gobi Province, has announced that "on May 25, 2022, the Ceke Port of Entry re-opened for coal export on a trial basis, with a limited number of trucks permitted to cross the border during the trial period".
SouthGobi said in its official announcement that it anticipates that its existing coal inventories are sufficient to satisfy expected sales demand for a period of "at least four months" following the resumption of coal exports to China.
A Shanghai-based market insider close to Ceke Port also confirmed that coal transportation via the port restarted on May 25, and that at the end of the day, about 55 vehicles had been cleared by China Customs, with the total volume of coal delivered estimated at around 7,700 tonnes.
"If the situation sees further improvement, in the future maybe 100-120 trucks might transport coal each day," he remarked, acknowledging though that this number would still be relatively low.
Daily truck crossings into China in 2020 peaked at 997 trucks, with coal imports topping 100,000 tonnes, Mysteel Global noted, while in first quarter 2021, the daily traffic was around 200-500 trucks/day. However, from Q2 last year, the number declined to around 100 trucks/day due to the frequent health checks and other measures imposed at Sino-Mongolian border checkpoints to contain the coronavirus spread. Eventually the traffic stopped completely.
The insider also mentioned that the distance from some Mongolia's major coal mines to Ceke Port is around 60 kilometres and that road freight rates are around Yuan 260/tonne ($38.9/t) currently, far higher than they were before the closure at around Yuan 180/t.
"The reopening of Ceke Port will definitely increase China's coal imports from Mongolia, which will then help to ease the supply tightness in coal domestically," the insider also commented.
For the time being, Ganqimaodu Port in Inner Mongolia, the biggest Sino-Mongolian road-port in terms of imports and the largest channel for importing coal from Mongolia, has also seen coal transportation gradually improve, with the daily traffic climbing to around 440 trucks/day recently, Mysteel Global noted.
In 2021, China's total coal imports from Mongolia reached around 16 million tonnes, accounting for 7.8% of total imports. Over January-April this year, coal imports totalled around 3.7 million tonnes, accounting for 8.5% of the total volume but down 51.5% on year.
For coking coal alone, China's imports from Mongolia stood at around 14 million tonnes in 2021, accounting for 25.7% of the total import volume. Over this year's January-April period, the import volume reached 3.4 million tonnes, accounting for 20.6% of the total volume. The total was also 49% lower on year.
As of May 25, the price of processed premium Mongolian coking coal with 10% ash, 27% volatile and 0.65% sulphur under Mysteel's assessment stood at Yuan 2,520/t FOT and including the 13% VAT.
Source:Mysteel Global
