China grabs heavy discounts from Russia on coal amid Ukraine war: Report

Beijing: China has taken full advantage of Russia's invasion of Ukraine, grabbing the huge discount offered by Moscow on coking coal which is used in steel mills, as Japan and the European Union have curbed imports leaving the Russian companies scrambling for buyers.

China imported 321,380 tonnes of liquefied natural gas from Russia last month roughly the same amount as in March last year despite an overall 17pc year-on-year decline in its gas imports, driven by soaring prices.

Beijing's willingness to work with Moscow will feed frustration in the West, as it undermines the effectiveness of sanctions launched over the past two months, media reports stated. China needs coal as it is the most common energy source in the country, representing more than half of total consumption despite efforts over recent decades to reduce usage.

On one hand, China is fulfilling its requirements and on the other hand, it is assisting Moscow in limiting the effect of Western sanctions keeping in view it itself does not face sanctions and its internal food security is not compromised.

China has moved to step up domestic coal mining, but its mines produce an inferior quality of material that is unsuited for use in steel mills, forcing it to rely on foreign imports. Imports of the fuel, which is used in making steel, rose to 1.4m tonnes in March from 590,000 a year earlier, reports suggested.

Intellasia further stated that Brent crude oil was trading at around $108 a barrel on Wednesday afternoon. In mid-March, traders had been selling Urals blend the most common Russian variety at discounts of $25 to $30 a barrel.

The EU purchased euro 5.2 billion of Russian coal in 2021. As a whole, coal imports fell 31pc year-on-year, driven by a collapse in demand for thermal coal, which is used for power generation, reported Intellasia. Holger Schmieding, an economist at Berenberg, said that timing "should allow EU members to find alternative sources".

It will also give Russia time to redirect its exports. The lure of cheaper energy, in the form of gas, coal and oil, and low-cost wheat from Russia far outweighs the fear of sanctions as China has decided to make deals with Russia as long as it can.