Chinese coal traders clog Mongolian border town seeking high-value fuel

Chinese coal traders are rushing to the small town of Ganqimaodu on the Mongolian border to cash in on imports as prices of the fuel have soared nearly 40% in a month after mine safety checks crimped supply while industrial demand is rising.

The dash to secure Mongolian supplies illustrates coal’s continued preeminence in the energy mix of China, the world’s biggest consumer of the fuel. The increasing imports also reflect the country’s appetite for foreign supplies even as domestic coal output has climbed to a record so far in 2022.

Thermal coal prices at Qinhuangdao, the main port for loading northern Chinese supplies onto ships bound for users in the south, have climbed to 1,520 yuan ($212.20) a tonne this week compared to about 1,080 yuan in late August, according to three China-based coal traders.

That is the highest in six months and above the government price cap of 1,150 yuan a tonne for coal sold to utilities. Traders can make about 200 yuan per tonne in profit after bringing Mongolian fuel to northern Chinese ports, said one of the traders, who is based in the Inner Mongolia region where Ganqimaodu is located, and has recently struck deals in the town.

“The town is full of coal traders and it’s hard for the newcomers to find hotel rooms,” he said.

Trade between China and Mongolia has suffered since the COVID-19 pandemic, with transport restrictions cutting coal exports from one of the world’s top 10 producers.

Daily coal imports via Ganqimaodu averaged about 90,000 tonnes....