Coal export likely to rally in coming months
- By Amarjargal Munkhbat -
- Nov 17,2022
Mongolia’s coal export is rising as there is less congestion at the Chinese port. The volume of coal transportation has risen in the past two months and analysts emphasized that if this situation continues, coal export can reach up to 30 million tons by the end of the year. As of November, Mongolia has exported 24.4 million tons of coal.
China consumes about 4.3 billion tons of coal annually, of which 611 million tons are imported. According to an international economic review, it seems that China’s coking coal prices will rise in the upcoming months.
As of October 10, the price of a ton of coal in Shaanxi Province, China is 2,488 CNY or 347.8 USD, which is 9.1 USD higher than in September, while at the Tianjin port, it costs 2,760 CNY or 385.7 USD, 29.4 USD higher than in the previous month. According to SXCoal, China’s demand and supply of coking coal have been relatively stable at around 39 million to 40 million tons in recent months.
The Ministry of Mining and Heavy Industry reported that from November 4 to November 10, 6,126 trucks and 1,549 containers have transported 893,800 tons of coal daily. Since the beginning of the year, Mongolia has exported 24.38 million tons of coal, which is a 71 percent increase from the same period of last year.
There are currently two problems facing coal transportation. Firstly, there are restrictions due to China’s zero-COVID policy and secondly, there is a shortage of diesel fuel.
The price of diesel fuel is about 3,760 MNT per liter in Mongolia but according to the reports by enterprises and coal transporters operating in Tsogttsetsii soum, there is a shortage of diesel fuel, with prices reaching 4,300 MNT per liter and transportation services are on the verge of stopping.
Although the government’s policies have been implemented and coal exports have improved, there is a high probability of unforeseen risks in exports due to shortages of diesel fuel and gas. Therefore, if the government does not solve the fuel problem urgently, there is a risk of losing momentum and missing opportunities when the prices of coal are high. As a result, coal exports could slow down, decelerating economic recovery and activities to increase foreign exchange reserves.
Currently, coal export has fulfilled the annual guidance plan by 135 percent complete. From September 1 to November 15, Erdenes Tavan Tolgoi exported coal worth 2.8 million MNT. The company exported 1 million tons of coal in the first 15 days of this month.
The price of coking coal going out through the Gashuunsukhait-Gantsmod port has risen along with the number of cars crossing the border. Specifically, as of October 10, coal cost an average of 236.6 USD per ton, up by 29.7 USD compared to the previous month. Also, an average of 640 trucks crossed the border in September, which marked an increase of 80 trucks from the previous month.
The price of coking coal going through Shiveekhuren-Sehe port stands at 183.1 USD, up by 8 USD compared to the previous month. Coal accounted for 54 percent (4 billion USD) of the 7.5 billion USD worth of products exported to China last month.