China and Mongolia are in the process to rebuilding coal trade volumes impacted earlier by the COVID-19 pandemic, with the latter hoping to lift coal deliveries to China while keeping the virus largely at bay at home. However, when the volume will return to levels seen prior to the outbreak of the contagion remains unclear, according to sources.
In the past, some 1,500-1,700 trucks laden with Mongolian coal would enter China per day but recently, truck traffic has declined to only 100 trucks/day, Mongolia’s deputy prime minister, U. Enkhtuvshin, revealed at a meeting last week with Chai Wenrui, China’s ambassador to Mongolia, according to a post on the Mongolia government website.
“Combating and preventing the pandemic is a priority, but at the same time, we need to intensify our economic efforts,” he said, vowing to increase coal deliveries across the border into China.
In response, Chai said that at the local level, “it is possible to increase the volume of transportation through coordination between the two countries’ border crossings,” he was quoted in the government post as saying.
On April 25, officials from both countries also held an online meeting to discuss ways to increase coal exports via Mongolia’s Gashuun Sukhait-Ganqimaodu checkpoint, the country’s largest coal transportation conduit, according to a post from the government of Bayannur city, where Ganqimaodu is located.
The post pointed out that thanks to the measures introduced to disinfect trucks and test drivers, no case of COVID-19 infection had been confirmed in workers involved in cross-border transportation since Ganqimaodu reopened its gates for mineral deliveries from mid-March. However, no detailed schedule or plan regarding the recovery of coal trade was released.
Coal plays a crucial role in Mongolia’s economic development, and almost all Mongolian coal for export was sold to China. Owing to the pandemic and Ulan Bator’s efforts to keep the virus outside its borders, Mongolia’s coal exports plunged by nearly 60% on year to some 3.1 million tonnes in January-March quarter, as reported.
Owing to the low volume of Mongolian raw coal being delivered, the operating rate of independent wash plants close to the border remains low, Mysteel Global understood from coal processing sources.
Nevertheless, coking coal demand from Chinese coal users is low too, as most coke makers are keeping their coal stocks low while their coking margins remain so thin, according to a Shanghai-based analyst.
As of April 27, Mysteel’s price for Mongolian coal with 11% ash, 25% volatile and 0.7% sulphur had dipped further on week by Yuan 90/tonne ($12.7/t) to reach Yuan 990/t including the 13% VAT, or hitting a 32-month low.
This article has been exchanged under article exchange agreement between SteelMint and Mysteel Global
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