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UPDATE 1-North Korea exports more coal to China in March ahead of April halt

Published 21/04/2016, 06:40 pm
© Reuters.  UPDATE 1-North Korea exports more coal to China in March ahead of April halt

* North Korean shipments rise 80.6 pct in March, 45.22 pct in Q1

* Deliveries could fall in April as a result of sanctions

* Australia still biggest supplier, benefiting from low costs (Adds detail, background)

By David Stanway

BEIJING, April 21 (Reuters) - North Korea became China's second-biggest coal supplier in March, data from China's customs authority showed on Thursday, just ahead of a halt on coal shipments that started this month.

North Korea shipped 2.35 million tonnes to China, up 80.6 percent from a year ago. The country exported 1.56 million tonnes in February to China. First quarter shipments reached 5.53 million tonnes, up 45.2 percent on the year, putting the country third behind Australia and Indonesia.

China's Ministry of Commerce announced at the beginning of April that it would ban North Korean coal imports to comply with new United Nations sanctions on the country. China will make exceptions for coal delivered via North Korea's Rason port from third countries, and for exports intended for "the people's well-being" and not connected to nuclear or missile programmes.

Analysts said the sanctions were unlikely to have a substantial impact on trade.

"The impact on the overall market won't be too big - Chinese imports still mainly originate from Australia and Indonesia and a few other surrounding countries," said Wang Fei, coal analyst with China's Huaan Futures.

Overall coal imports, excluding lower-grade lignite, surged 29.75 percent in March, on rising demand from power plants seeking to restock ahead of the peak summer consumption season.

Domestic price increases also made foreign coal more competitive, with Chinese coal about 30 yuan ($4.63) a tonne cheaper, said the China Coal Trade and Distribution Association (CCTD) in a note this week.

"There was a big rebound in imports in March," said the CCTD. "International coal prices will continue to fluctuate at a low level, and their impact on domestic coal imports cannot be underestimated."

Prices at the port of Qinhuangdao in Hebei province SH-QHA-TRMCOAL have gained 5.4 percent so far in 2016, suggesting that China's efforts to curb supplies are having an impact. Benchmark Newcastle coal prices GCLNWCWIDX have risen by just 0.7 percent since the turn of the year.

Australia remained China's top supplier in March, with shipments reaching 5.76 million tonnes, rising 7.9 percent compared to last year.

North Korea overtook Indonesia in March, which saw shipments fall 12.1 percent to 2.33 million tonnes, figures from the General Administration of Customs showed.

Coal stocks at major power plants have fallen 20.1 percent so far this year, the CCTD said. Coal output dropped 5.3 percent over the first quarter, while consumption was down 3.7 percent.

($1 = 6.4780 Chinese yuan renminbi)

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