Russia’s coal sales to China fall by 22% in January, February 2024
Chinese coal imports soar by 23% y-o-y, but imports from Russia fall by 22%
China reinstated coal import duties in calendar year 2024 (CY24), potentially increasing import costs from major suppliers. The duties imposed are 3% on coking coal, anthracite, and lignite, and 5-6% for thermal coal from nations without free trade agreements. As a result of the restored tax, Russia’s coal sales to China plunged by 22% in January and February 2024 compared to the same months in CY22, making Russian coal more expensive.
The reintroduced import tax on coal does not affect Australia or Indonesia, two major coal exporters and direct competitors of Russia, as they have free trade agreements with China. Chinese coal imports soared by 23% y-o-y, but imports from Russia fell by 22% to 11.5 million tonnes (mnt). Despite the overall increase in total Chinese coal imports in the first two months of 2024, imports from Russia experienced a significant decline.
China had removed the import tariff shortly after the Russian invasion of Ukraine disrupted energy markets in CY22 and sent coal prices soaring to all-time highs, coinciding with China’s efforts to avoid blackouts. The tax has now been reimposed to protect Chinese coal mining firms and domestic production, which has reached record highs. Currently, Indonesia is China’s top coal supplier, while Russia remains in the second spot. Russia is facing difficulties in selling its coal to the wider Asian market.
The lower prices of coal from major exporters such as Indonesia, South Africa, and Australia are undermining Russia’s ability to sell more coal to Asia, which has become Moscow’s primary export market following Western embargoes on its coal in CY22. China, South Korea, Turkey, and India are currently the top importers of coal from Russia, receiving over 80% of Russia’s coal exports between August 2022 and July 2023, compared to 47% from August 2021 to July 2022.
Domestic logistical challenges, including limited eastbound rail infrastructure from the Kuzbass region in Western Siberia, where coal production is centered, are also hindering Russia’s coal exports, leading to congestion, delays, and longer turnaround times.