South Korea's coal imports surged in June, hitting a five-month high and the highest for the month in four years. Imports of Australian and Russian coal rose sharply, together accounting for over 60% of the total.

June coal imports totaled 10.13 million tonnes, up 31.97% from 7.67 million tonnes a year earlier and up 22% from 8.30 million tonnes in May, according to Korea Customs Service data released recently.

The surge was driven by multiple factors, including pre-summer stockpiling by power utilities to ensure stable supply ahead of the peak demand season.

South Korea's operational power generation capacity stood at 93 GW in June, up 10.26% from the previous month but down 6.66% year on year, according to Korea Electric Power Corp data. Peak power demand reached 82.2 GW, down 3.98% year on year but up 7.26% month on month. Coal-fired power capacity was flat at 40.8 GW, while combined solar, wind and hydro capacity rose 287 MW from a month earlier.

In the first half of the year, South Korea's total coal imports reached 57.04 million tonnes, up 21.55% year on year. Coal remained the cheapest energy source for South Korea, as international LNG prices have risen sharply since the US-Iran conflict.

This has strengthened the economic incentive for gas-to-coal switching this year. Meanwhile, lower nuclear availability has boosted coal-fired power generation as a key alternative.

Imported coal has been meeting the power sector's demand, but arrivals have been outpacing actual consumption growth. Once stockpiling slows, overall arrivals are expected to decline.

While June imports were strong, the room for coal to replace nuclear power is narrowing. If nuclear recovery continues to be delayed during the peak summer season, demand for LNG for peak-shaving may rebound.

Coal import value in June stood at $1.39 billion, up 62.39% year on year and up 26.78% month on month, implying an average import price of $136.76/t, up 23.05% year on year and up 3.91% month on month.

In January-June, cumulative import value reached $7.05 billion, up 23.86% year on year, implying an average price of $123.6/t, up 1.9% year on year.

By coal type, June thermal coal (other bituminous and other coal) imports totaled 6.92 million tonnes, up 39.21% year on year and up 23.77% month on month, accounting for 68.29% of total imports, up from 67.31% in May. Coking coal (other coking coal and hard coking coal) imports stood at 2.26 million tonnes, up 19.88% year on year and up 32.1% month on month, accounting for 22.32% of the total.

PCI coal imports were 535,500 tonnes in June, up 5.63% year on year but down 32.59% month on month, accounting for 5.29% of the total. Anthracite imports totaled 415,700 tonnes, up 32.57% year on year and doubling month on month.

By origin, Australia remained South Korea's largest coal supplier in June, with imports of 4.13 million tonnes, up 98.09% year on year and up 19% month on month, accounting for 40.74% of total imports, slightly down from 41.77% in May.

Imports from Russia totaled 2.21 million tonnes, up 54.24% year on year and up 12.98% month on month, accounting for 21.83% of the total, down from 23.57% in May. Russian coal remains the most cost-effective option for South Korean buyers, who have increased purchases from both Russia and Australia.

Imports from Indonesia stood at 1.72 million tonnes, down 11.36% year on year but up 22.49% month on month, accounting for 17% of the total. Imports from Canada reached 994,000 tonnes, up 42.09% year on year and up 13.2% month on month. Imports from the US totaled 425,300 tonnes, surging 46.28% year on year and 124.26% month on month.

Downstream, South Korea imported 27,200 tonnes of coke in June, up 117.27% year on year but down 55.83% month on month, with an import value of $8.13 million, up 105.33% year on year but down 25.25% month on month, implying an average price of $298.81/t, down 5.5% year on year but up 69.23% month on month.

In January-June, cumulative coke imports reached 399,500 tonnes, up 2.2 times year on year, with a cumulative import value of $67.77 million, up 116.39% year on year.