New data from S&P Global Market Intelligence shows that Russia has been increasing coal shipments to China.
In the first 28 days of June, Russian seaborne coal deliveries to China increased by over 50% compared to the same period last year. Russian seaborne supplies to China increased by 20% in May.
China's domestic production has increased. The latest data from the National Bureau of Statistics of China shows that in the first five months of the year, coal production rose 10.4% year-on-year, while imports fell by 13.6%.
The associate director of S&P Global Market Intelligence said that China has been buying more Russian coal since May.
Russia has offered steep discounts on coal prices.
Russia is a major coal exporting country. After Japan banned Russian imports of coal, Moscow was forced to sell it at a reduced price.
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Coal imports into mainland China were lower due to the implementation of a strict zero carbon dioxide policy.
Record-high international coal prices, as well as increasing domestic coal production in China, were responsible.
Russian seaborne coal shipments to China in March fell 40% year-on-year, as Omicron outbreak took hold in China, before they picked up in April as discounts in Russian coal kicked in.
The Group of Seven wealthy countries pledged to move away from Russian energy as they stepped up sanctions on Russia.
The European Union imposed a ban on Russian coal in its fifth package of sanctions in April but it has been pushed back to August.
The G-7 nations reinforced their support for Ukraine. There was a proposal to cap the price of Russian oil.
Russia's war on Ukraine has led to a rise in oil prices this year.
The market will be keeping a very watchful eye on third quarter demand from China as a rise in demand here could see international coal prices rise to unimaginable levels.
Major oil companies are no longer buying Russian oil. The European Union plans to reduce its oil imports from Russia.
Coal shipments from Russia and Indonesia are expected to increase in the second quarter, according to S&P Global Market Intelligence.
All eyes will be on China to see if it will ramp up coal imports as the economy reopens and Covid travel restrictions are relaxed.
Coal prices could go up due to increased demand from China.
International coal prices could rise to unimaginable levels if demand from China increases in the third quarter.
After China imposed restrictions on Australian coal in 2020, Indonesia, Russia and Mongolia became the top coal suppliers to China.