(Bloomberg) -- Chinese purchases of Russian coal slumped 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 over January and February surged 23% year-on-year to 74.5 million tons, Russia’s sales fell 22% to 11.5 million tons, according to the latest customs data. Import levies were restored at the start of the year, although other major suppliers like Indonesia and Australia aren’t affected due to free-trade agreements with Beijing.  

The tariffs were removed in May 2022 to guard against supply risks after Moscow’s invasion of Ukraine roiled global energy markets. That helped pave the way for record imports last year, which included an increased portion of Russian coal shunned by other buyers. Now, policy has shifted to protecting China’s mining companies from the consequences of a glut after domestic output also rose to an all-time high.

Russia is still China’s No. 2 supplier after Indonesia, but the threat of trade actions could start to affect its eastward flows.

The US put sanctions on Russian coal exporters including Suek JSC, the nation’s biggest producer of the fuel, and Mechel PJSC in February. That’s curbing interest from buyers in China, worried about being hit by punishments that could involved restricting their access to shipping or banking services.

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

On the Wire

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  • China is building its military and nuclear arsenal on a scale not seen since World War II and all signs suggest it’s sticking to ambitions to be ready to invade Taiwan by 2027, a top US admiral testified.
  • China’s Sinochem Group has purchased one of the first crude cargoes that will be shipped through a new Canadian pipeline that’s designed to move more oil from landlocked Alberta to the Pacific Coast for export.
  • Chinese developer Radiance Holdings Group Co. defaulted on a $300 million bond after it missed a payment due Wednesday, making it the latest company in the nation’s real estate sector to fail to meet its repayment obligations.

The Week’s Diary

(All times Beijing unless noted.)

Thursday, March 21:

  • EARNINGS: Cnooc (briefing in HK at 17:00)

Friday, March 22:

  • China weekly iron ore port stockpiles
  • Shanghai exchange weekly commodities inventory, ~15:30
  • EARNINGS: CMOC, Zijin Mining, Hongqiao, Shenhua, ENN Energy

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