China imported 7.42 million tons of coal from Russia last month, according to data from the General Administration of Customs on Saturday. This is the highest monthly figure since comparable statistics began in 2017, up from 6.12 million tonnes in June and 6.49 million tonnes in July 2021.
Western countries were avoiding shipments from Russia in anticipation of a European Union ban on Russian coal that came into force on August 11, aimed at reducing the Kremlin’s energy revenues following its February invasion.
The ban forced Russia to target buyers such as China and India and sell at a heavily discounted price.
Russian thermal coal with a calorific value of 5,500 kilocalories (kcal) traded around $150 a tonne on a cost and freight basis in late July, while coal of the same quality at the port of Newcastle in Australia was valued at over $210 per ton on a free on board (FOB) basis.
Some Chinese traders expect more Russian coal to flow into China in the fourth quarter, when utilities in northern China build up inventories for the winter heating season.
July shipments of Indonesian coal, mostly cheap, low-quality thermal coal with a calorific value of less than 3,800 kcal, reached 11.7 million tonnes. This figure is up 22% from June, but down 40% from the previous year. China has reduced its overall coal imports in recent months due to rising domestic production.
Power plants in southern China stepped up tenders to buy Indonesian coal in August because it is cheaper than domestic coal, while demand for coal-fired power generation was boosted by a surge record heat.
Indonesian thermal coal with a calorific value of 3,800 kcal changed hands around $78 per ton on an FOB basis last week, which would still be less than around 690 yuan ($101) for local coal considering account for shipping costs.
Customs data from China shows that there were no shipments of coal from Australia in July.
($1 = 6.8091 Chinese yuan renminbi)