- China’s safety curbs tighten coking coal supply, boosting import demand
- Mongolia’s price advantage and expanding capacity strengthen its supply dominance
Mongolia exported 40.58 million tonnes of coking coal to China in the first half of 2026, up 64% on year and accounting for 60.7% of China’s total coking coal imports during the period, the latest Chinese Customs data showed. The surge has lifted Mongolia’s ranking above Australia’s as China’s largest coking coal supplier, after Australia had held the position for years.
Three forces are driving the shift, Mysteel Global suggests: namely, a supply shortfall in China, Mongolia’s expanding export capacity, and a widening price advantage over competing origins.
China’s supply gap opens the door
The immediate catalyst for this year’s surge was China’s intensified mine-safety campaign initiated by local governments following the fatal gas accident in North China’s Shanxi province in late May which became the country’s deadliest coal-mining disaster in 17 years, as reported.
Since the accident, 186 coking coal mines in Shanxi have been suspended for various periods, involving a combined capacity of 252.65 million tonnes/year. By late July, 85 mines remained offline, with 92.55 million t/y of capacity still affected, according to Mysteel’s mine survey.
The disruption has significantly tightened domestic supply. The capacity utilization rate of Mysteel’s 523 tracked coking coal mines nationwide fell from around 93% before the accident to about 67% at the height of the disruption.
Although some production has resumed, the supply gap is expected to persist. By this year’s fourth quarter, Mysteel expects national coking coal mine utilization to have recovered to only 88-95% of pre-accident levels, leaving room for imports to remain elevated.
Mongolia is ready to fill the gap
Mongolia is well positioned to capture the additional demand. The Mongolian government aims to raise total coal exports to 90 million tonnes in 2026 and 100 million tonnes in 2027, from 83 million tonnes in 2025, as reported. China is the destination for almost all of Mongolia’s coal exports.
State-owned miner Erdenes Tavan Tolgoi (ETT) is also targeting daily coal shipments of around 150,000 tonnes to Chinese customers this year, about 28% above 2025 levels. The commissioning of ETT’s Borteeg block in June provides another source of incremental supply. The new operation is expected to increase ETT’s production and export capacity over time, supporting the company’s efforts to expand deliveries to China.
Rail infrastructure could become an increasingly important driver, in this regard. The 233.6-km railway linking the Tavan Tolgoi coalfield with the Gashuun Sukhait border crossing is designed to transport 30-50 million tonnes of coal annually. Yet utilization has remained well below its designed capacity.
The key bottleneck is the lack of a direct railway connection between Gashuun Sukhait on the Mongolian side and the Ganqimaodu border port on the Chinese side in Inner Mongolia, meaning that coal still needs to be transferred by truck into China.
Construction of the cross-border railway began in May 2025 and is expected to be completed next year. Once operational, the line is expected to add around 30 million tonnes/year of cross-border transport capacity, potentially giving Mongolia considerably more room to expand exports.
Price and quality seal the deal
Supply availability alone does not explain Mongolia’s rapid rise to become China’s dominant coal import source. Price competitiveness has been the decisive factor in encouraging Chinese buyers to switch origins.
Mongolian 5# washed coking coal, typically characterized by low sulfur, medium ash and a CSR of around 58-60%, is broadly comparable with Shanxi low-sulfur primary coking coal.
The Mongolian product is currently around Yuan 300/tonne ($44.5/t) cheaper than its Shanxi counterpart and about Yuan 100/t below comparable Australian cargoes, according to Mysteel assessments.
The price gap widened sharply after the Shanxi accident. Prices for low-sulfur primary coking coal in Shanxi have risen around 23% from pre-accident levels, while comparable Mongolian coal has gained only about 6%. At one point, the price difference exceeded Yuan 300/t.
That arbitrage has given Chinese buyers a strong incentive to increase Mongolian purchases, particularly as domestic supply remains constrained.
China’s safety-driven supply shortfall is keeping import demand elevated. Mongolia has the resources and infrastructure pipeline to increase exports. And its price advantage gives Chinese buyers a clear economic incentive to switch from more expensive domestic and seaborne alternatives.
So far, none of these drivers has weakened materially.
Consequently, China’s coking coal imports from Mongolia are likely to remain high throughout this June-December half, with full-year volumes widely expected to exceed 80 million tonnes.
Note: This article has been published in accordance with a content exchange agreement between Mysteel Global and BigMint.
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