South Korea: Coking coal imports fall to seven-year low in CY20

South Korea’s coking coal imports plummeted to a seven-year low of 21.27 million tonnes (mn t) in CY 2020, down by almost 6% compared with 22.62 mn t in CY 2019, according to the country’s latest customs data.

South Korea’s imports of coking coal were particularly hard hit as steel demand slumped amid the virus outbreak early last year.

Presently however, South Korean coking coal imports have surged by 9.7% month-on-month and 7.4% year-on-year to 1.86 mn t in Dec’20, as against 1.69 mn t in Nov’20 and 1.73 mn t in Dec’19.

Covid-19-led steel production cuts weighed on South Korean coking coal imports in CY20

South Korean spot demand for seaborne coking coal had been dampened by massive steel output cuts over the first half of last year. Depressed end-user demand led to surplus finished steel inventories with production scaled back aggressively as the coronavirus pandemic ravaged downstream demand for steel.

Construction and manufacturing activities remained relatively slow, while automotive-grade steel demand collapsed following a sharp contraction in vehicle sales. Earlier last year, a vast majority of South Korean automakers were compelled to cease operations because they were unable to source vital parts from their facilities in China during the lockdown period.

Subsequently with the Covid-19 pandemic strongly hitting the manufacturing sector in April, several major South Korean steel producers had been forced to curtail production in line with the country’s carmakers halting their output.

Steel demand from South Korea’s domestic automakers fell drastically in the first quarter of last year as vehicle sales to the export market shrunk by double digits. Demand sank deeper in the subsequent quarter as the country’s automakers further slashed production.

Major Coal Exporters to South Korea in CY20

Australia, Canada, Russia and the United States have traditionally been the largest exporters of coking coal to South Korea. These four countries typically supply about 95% of South Korea’s imported coking coal.

South Korean coking coal imports from Australia were 7.77 mn t in CY20, 5.8% lower than 8.25 mn t in CY19, but 9.4% higher at 648,128 t in Dec’20 than 592,445 t in Nov’20.

In the first five months of 2020, however; South Korea imported 3.55 mn t of coking coal from Australia during January-May, 2.5% higher when compared to the same period a year ago.

Notably, US coking coal exports to South Korea witnessed a substantial decline of 18% during CY20 totalling 2.04 mn t, against 2.49 mn t in CY19.

Meanwhile, South Korea also saw its coking coal imports from Canada and Russia declining year-on-year by 2% and 6% respectively in CY20.

The following table provides a detailed breakup of coal import shipment volumes in the last month.

Source: South Korean Customs | Quantity in tonnes (t)

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By Aditya Sinha