Another data point on North Korea and the world economy
By Benjamin Katzeff Silberstein
At 38 North, I recently looked at how world market price swings impact the North Korean economy. Given the lack of consistent price data for coal in North Korea, I was unable to look at the potential impact of global coal price changes on domestic prices (and export prices) in North Korea. But with global coal prices shooting up following bans on imports of Russian coal and other energy products, North Korean producers will likely benefit significantly, at least in the short- to medium-term. So although global food price hikes following Russia’s attempted invasion of Ukraine may hurt the North Korean economy in some ways, rising coal prices will benefit it in others.
Daily NK notes this in an interesting recent report. According to their sources, prices paid by Chinese importers for North Korean coal have risen by 40 percent in a short time:
According to multiple Daily NK sources in North Korea on Wednesday, Chinese traders are paying an average of USD 70 per ton for smuggled North Korean coal.
That is not even one fourth of international price coals, including Australia’s benchmark Newcastle index, which have been climbing at a frightening rate due to the EU’s ban on Russian coal imports.
The price of smuggled North Korean coal is about half that of the local price in China, where there is a price cap. However, it is also more than double the price of exported North Korean coal prior to the COVID-19 pandemic.
Moreover, even compared to early October, when smuggled coal sold for about USD 50 a ton, the current price represents a more than 40% climb from six months earlier.
At the time, Chinese coal prices were skyrocketing due to local shortages following Beijing’s suspension of Australian coal imports due to trade disputes with Canberra.
In the end, the price of North Korean coal is essentially hitching on to continuously rising global coal prices.
Moreover, the sources said North Korea is selling high-quality coal of more than 7,000 calories to China. Accordingly, more Chinese traders are reportedly demanding North Korean coal.
They further said that while coal exports are not as brisk as they were prior to the pandemic, North Korea has been continuously exporting coal through the port of Nampo as of late.
(Source: Seulkee Jang, “N. Korea sees coal prices rise as international energy prices skyrocket,” Daily NK, April 21st, 2022.)
It is always striking and interesting to note just how much of a buyer’s monopoly North Korea is subject to when it comes to China’s coal imports. Because China is the only country of true significance for North Korean coal exports, it is to a large extent free to set the prices. As the article notes, the prices Chinese importers pay for North Korean coal are not even one-fourth of global prices. It’s worth keeping in mind when China is referred to as North Korea’s economic “lifeline”. It may be somewhat true, but it’s far from that simple.View Original Article