Mongolian cross-border coal trucking fees hit record low
For example, the trucking rate for the 40 km "short haul" route was at a record low of only Yuan 50/tonne ($6.9/t) as of March 26 having nosedived by a cumulative Yuan 65/t since March 21, Mysteel's tracking data show.
Meanwhile, the rate was also significantly lower than the Yuan 280/t recorded a year earlier, and in stark contrast with a record high of Yuan 1,325/t truckers were earning in late April 2022, the data show.
Using the short-haul route from Tsagaan Khad, trucks carry mostly coking coal mined in Tavan Tolgoi, Mongolia's largest coking coal deposit located in Omnogovi province, to China's Ganqimaodu port where it is transhipped for the journey to Chinese markets including Inner Mongolia, Shanxi, Hebei and Gansu, Mysteel Global noted.
The key reason for the fee slump relates to Chinese trading firms stepping up efforts to lower the trucking fees they have to pay the Mongolian trucking firms on this key cross-border route to offset some of their losses on coal prices, Mysteel Global learned from sources.
Mysteel's assessment for the price of Mongolian 5# raw coal (A<20%, VM<28%, S<0.8%, GRI>80, MT<5%) dropped to Yuan 1,315/t as of March 26, marking a substantial retreat of Yuan 175/t from a month earlier and hitting a nearly seven-month low. As the traders generally hold their stocks at Ganqimaodu port for about a month, they're already losing money on sales they're making this week. Moreover, the traders generally pay for onward transportation costs to Chinese end-users.
The coal price has generally been softening since December last year, tracking the steady declines seen in hot metal production among Chinese steel mills due to sluggish steel sales and the gloomy short term outlook for the domestic steel market.
On Tuesday, a large steelmaker in Northwest China floated a tender seeking 12,800 tonnes of Mongolian 5# processed coking coal, with the deal concluded at Yuan 1,666/t on delivered to plant basis and with VAT, down by Yuan 24/t from its last deal done in mid-March, sources disclosed.
Although inquiries for Mongolian coking coal at Ganqimaodu port have increased slightly this week, Mongolian coal prices still face more downward risk in the days ahead, a market watcher warned.
The cautious outlook partly stemmed from the looming downside pressures for China's met coke market, with some steel mills pressing independent met coke producers on March 27 for another Yuan 100-110/t cut in their coke selling prices. If the coke makers are forced to concede again, this could further rein in coke firms' buys of Mongolian coking coal, Mysteel Global notes.
Besides, coal stockpiles at the supervision warehouses of Ganqimaodu Customs had mounted to more than 3.1 million tonnes as of March 26, imposing more pressure on port traders in the short run.
During March 1-26, the daily truck traffic of Mongolian coal to the Ganqimaodu border crossing averaged 1,022 trucks/day, jumping by 37.55% compared with the corresponding period last month, Mysteel's data show.
Written by Tammy Yang, yangfangb@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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