China has boosted imports of Russian metallurgical coal, a key raw material for steel production, to record levels, according to analyst firm Kpler. Sea shipments of Russian coking coal reached 1.37 million tons in April compared to 0.92 million tons in March and 0.75 million tons in February.
Total deliveries of Russian thermal and coking coal to China in April reached 4.37 million tons, twice the level of the previous month.
While most importers shunned supplies from Russia, some buyers in China, the world's largest consumer of coal, aggressively increased purchases by entering into necessary loan agreements with banks.
Coal trade between China and Russia ground to a halt at the end of February, when international banks suspended the issuance of letters of credit under the threat of Western sanctions.
However, as some Chinese banks eased restrictions on financial assets for certain clients, coal trading with Russia resumed in March, although some hurdles such as shipping and insurance remain.
Premium Russian coking coal traded at an average of $386 per ton in ports in northern China in April, compared to $473 per ton for Australian coking coal of similar quality, according to traders.
According to consulting firm Mysteel, blast furnace capacity utilization at 247 steel mills across China was 81.9% in early May, well below the 90% in April 2021.
Despite recent weak economic data, China's central bank this week said it would not resort to new stimulus and would not use real estate - the source of 35% of steel demand - as a short-term solution for the economy.