China could face Mongolia coal import shortage amid coronavirus lockdown, but supply disruptions unlikely
- Mongolia has imposed a national coronavirus lockdown until December that could impact exports of coking coal to China
- Even if supply from Mongolia slips, China has capacity to ramp up domestic production and is unlikely to change import quotas
China may face shortages in imports of coking coal from major supplier Mongolia as the landlocked country heads into a new pandemic lockdown, though it is unlikely to cause major disruptions in domestic supply or a return of Australian imports this year.
The Mongolian government has imposed a national lockdown that will last until early December after reporting its first community transmission last week, with the coal market now on the lookout for its impact on production and exports to China, its biggest coal buyer.
China in general has been careful with its coal imports, due to environmental protection and industrial evolution
But as China is not dependent on coking and thermal coal imports, disruptions in overseas shipments will not affect its domestic supply nor will it be forced to increase imports from other countries, such as Australia, whose exports were curbed through verbal ban and a depletion of quotas last month, analysts said.
Despite a dip in shipments to China from a peak in September and October, Mongolian coal prices were buoyant due to strong Chinese demand, he said. He was also optimistic about Mongolian logistics given its borders with China remained open, although Russian checkpoints had been temporarily shut.
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Even if supply from Mongolia slips, China has capacity to ramp up domestic production, Xie said, adding that would be unlikely as authorities have been looking to wind down coal use.