Chinese coking coal and coke futures gained more than 5% each on Wednesday after reports that the country would begin limiting imports from Mongolia and Russia to prevent the spread of the Omicron variant of the coronavirus.
Futures contracts for coking coal traded on the Dalian Commodity Exchange for December delivery rose as much 8.4% after state media and local governments reported some border cities halted non-container imports by rail of coal, iron ore, copper ore and zinc.
The increase in the price of coking coal, which is used to produce steel, is one of the first signals that the new variant could cause some of the same supply-side pressures and commodity price rises seen after the emergence of the Delta variant.
Chinese officials have been closely monitoring coal prices. Last week, the National Development and Reform Commission (NDRC), the main state planner, sent a delegation to Huaneng Group, one of the five largest state-owned electricity generation enterprises in China, to study pricing.
“Practice has shown that in the case of market failures and abnormal rises in coal prices, the state has adopted comprehensive measures to strengthen regulation and supervision, and guide coal prices to return to a reasonable range, which is a full manifestation of the organic combination of an effective market and a proactive government,” the NDRC said in a follow-up statement.
Russia has been stepping up energy cooperation with Beijing during the first nine months of this year with bilateral energy trade reaching a new high.
The two sides vowed to further enhance energy cooperation in sectors such as oil and gas, nuclear, petrochemicals and renewables.
Bilateral trade between China and Russia in both natural gas and coal has increased more than 60% year-on-year so far, while the electricity trade volume rose 1.4% year-on-year to 2.38 billion kilowatt-hours, state media said.
- Reuters with George Russell