Weakness of Chinese imports of Russian coal due to import taxes.

Chinese purchases of Russian coal fell in the first two months of the year due to the reinstatement of customs duties that make Russian supplies less competitive. According to the latest customs data, while China's total coal imports for January-February rose 23% to 74.5 million tons, Russian sales fell 22% to 11.5 million tons. Import taxes were imposed earlier this year, but other major suppliers such as Indonesia and Australia are unaffected by the measures thanks to free trade agreements with Beijing.

The resumption of import duties in May 2022 to secure supplies after Moscow's armed invasion of Ukraine shook global energy markets. It helped set record imports last year, including an increased share of Russian coal rejected by other buyers.

Russia is still China's second-largest coal supplier after Indonesia, but the threat of trade measures could start to affect Russian supplies. The U.S. in February imposed sanctions on Russian coal exporters, including the fuel's largest producer, Suek JSC, and Mechel PJSC. That has deterred interest from buyers in China, who worry about possible penalties, including restricted access to transportation or banking services.

"Russian coal imports may remain at current levels due to political uncertainty"," Feng Huaming, an analyst with the China Coal Transportation and Distribution Association, said at a press conference on Wednesday.

Source:

Bloomberg News.