SHANGHAI, Oct. 26 (SMM) -- Hebei, one of the largest iron and steel producing province in China, is also domestic largest coking coal importing region. Hebei used to import coking coal from Australia, but prefers to import coking coal from Mongolia since early this year, with the import volume twice as much as that from Australia.

According to Steelease sources, Jingtang port of Tangshan inspected 3.55 million mt of coking coal in the first three quarters this year, down 47.55% YoY. Coking coal imports from Mongolia to Jingtang port outstripped 2 million mt, much higher than 1.05 million mt from Australia.

Australia, Canada, US and Russia used to be the largest coking coal importers in the world, with Australia the largest importer, from which the export volume accounting for 60% of global total volume. But transportation problems of Australia have hampered coking coal supply, with the port transportation ability accounting for only 80% of capacity. Meanwhile, coking coal capacity was affected as the railways construction expanded very slowly, while Canada and US are both faced with high sea freight charges. Russian is in the face of defective railway transportation ability of coal, which deteriorates in the winter due to freezing weather.

Coking coal imports from Mongolia to Hebei surged due to four factors. First, Mongolia is one of the coal-rich regions in the world, owning the largest and undeveloped Tavan Tolgoi Coal Mine. Second, Australia is far away from China, and coking coal imports from Australia cost high sea freight. Mongolia is near to China, and China has built railways in service for coal transportation in recent years, with relevant infrastructure at ports continuing to improve. Third, import prices from major importing countries such as Australia are USD 200/mt, while the average settlement price of coking coal imports from Mongolia is USD 70.5/mt, so Mongolia has an advantage in price even plus freight charges. Fourth, coking coal from Mongolia is of high grade, most of which is prime coking coal and 1/3 coking coal, and meeting the requirements for coking. In addition, Mongolia needs capital support as it is in the developing stage; China-based Shenhua Group is increasing investment in infrastructure construction in Mongolia in order to interchange coal and ore resources, causing China’s imports from Mongolia to increase. As such, Mongolia is becoming the largest coking coal exporter to China.