Mongolia halts all coal exports amid coronavirus spread

Market: Coal, Coking coal
11/02/20

Mongolia has suspended coal exports with immediate effect until 2 March, with two confirmed coronavirus cases on 8 February in

Bayannur in China's Inner Mongolia 120km from the China-Mongolia border.

With the two confirmed coronavirus cases close to the border, government officials and residents of south Gobi province in Mongolia pushed for an immediate halt of exports to prevent a further spread of the infection within the country.

Chinese sellers of Mongolian coal have confirmed that all Mongolian coal exports to China have been halted since 10 February.

The move to halt exports follows stricter checks at borders between the two countries at the end of January, including rail and highway connections. Border authorities in Mongolia enforced temporary movement restrictions at its border with China, granting passage only to foreigners or commercial vehicles with licences from the government.

China obtains about 30-50pc of its coking coal imports each month from Mongolia. But tighter port controls throughout China in December 2019 restricted Australian seaborne exports into China, lifting Mongolian imports to more than 90pc of China's total coking coal imports for that month.

China imported 27.7mn t of coking coal from Mongolia during January-December 2018, which was nearly on par with the 28.2mn t imported from Australia over the same period. But Mongolian coking coal imports rose to 33.8mn t for January-December 2019 compared with 30.9mn t imported from Australia over the same period.

"Some Mongolian coal is of a quality similar to Australian tier-two hard coking coal, so we expect more enquiries and prices for second-tier hard coking coal to increase," a Chinese coal seller said.

This might present an opportunity for Russian coking coal producers to try and take more market share in China, said a Singapore-based trader, since most Mongolian coal has a quality that is slightly more comparable to that of Russian coking coal.

But after the previous border restrictions that Mongolia placed on China in late January, supplies of Mongolian coal heading to China have been limited for more than a week already.

"Buyers who are more reliant on Mongolian coal would have made moves earlier to search for alternatives, so I do not expect this to be a major development for the buyers anyway," a Beijing-based trader said.

By Rou Urn Lee and Dylan Wong

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