Russian coal imports to China plummet due to import taxes

Chinese purchases of Russian coal fell sharply in the first two months of the year after Beijing reimposed import taxes that make Russian supplies less competitive.

While China's total coal imports rose 23% year-on-year to 74.5 million tons in January and February, sales to Russia fell 22% to 11.5 million tons, according to the latest customs data. Import levies were reinstated earlier this year, although other major suppliers such as Indonesia and Australia have not been affected by free trade agreements with Beijing.

The tariffs were scrapped in May 2022 to guard against supply risks after Moscow's incursion into Ukraine roiled global energy markets. That helped pave the way for record imports last year, including a larger share of Russian coal that other buyers had shunned. Policy has now shifted to protecting China's mining companies from the effects of the glut after domestic production also surged to a record high.

Russia is still China's second-largest supplier after Indonesia, but the threat of trade action could begin to affect its flows to the east.

In February, the United States imposed sanctions against Russian coal exporters, including JSC Suek, the country's largest fuel producer, and Mechel PJSC. That's dampening interest from shoppers in China concerned about possible penalties, which could include restrictions on their access to shipping or banking services.

“Russian imports may remain at current levels given political uncertainty,” Feng Huaming, an analyst at the China Coal Transportation and Distribution Association, said at a media briefing on Wednesday.