Archive for March, 2022

New data: NK-China trade after the Covid border closure

Thursday, March 24th, 2022

By Benjamin Katzeff Silberstein

Numbers for China-North Korea trade are out from Chinese customs for the first two months after railroad traffic resumed in January. Overall, the data looks like what one would expect. Trade has skyrocketed by a factor of almost 41, from $3.27 million in January and February last year, to $136.5 million in the same period this year. The real figure is probably somewhat larger. The majority, $116.3 million, is constituted by North Korean imports from China, which goes a long way in explaining the exchange rate hike on North Korean markets that I wrote about yesterday here.

Despite the drastic increase, the numbers are about half of what they were pre-covid. That shouldn’t itself be surprising, since many trade connections have likely faltered during the long closure. Moreover, North Korean authorities seem determined to reconstitute the way they regulate trading rights and access.

Numbers source: Joongang Daily, here.

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Oil and fuel supply shortages on North Korean markets?

Wednesday, March 23rd, 2022

By Benjamin Katzeff Silberstein

It’s been a couple of months since railroad traffic opened again between China and North Korea. Although it isn’t very much time to fully evaluate such a drastic change, we can see some interesting price movements on the country’s markets. (Click to see the full graph.)

Average of market prices for rice, gas, diesel, USD and RMB in three North Korean cities. Graph by NK Econ Watch. Data source: Daily NK. 

First, and unsurprisingly, foreign exchange rates have gone up drastically. This makes perfect sense, since news of trade resuming would make more North Koreans want to hold foreign currency, to import and purchase goods from abroad.

Second, both diesel and regular fuel prices have gone up, and quite drastically. As Daily NK notes, the fuel price increase in North Korea is much higher than that of global oil prices. This is also logical, since businesses have likely increased their purchases of fuel in anticipation of increased demand as border trade increases. I’m not sure, however, that the entire magnitude of the increase can be explained this way, since in some localities, prices have more than doubled. Diesel prices have also skyrocketed, which is somewhat unusual since gas and diesel prices tend not to fluctuate this much together. (Gas prices are some of the most volatile on North Korean markets and often fluctuate with the geopolitical situation.)

Price hikes in China, on both diesel and gasoline, are likely a strongly contributing factor. Another significant factor, reported by Daily NK in the article above, is likely moves by the North Korean government to restrict private fuel sales, perhaps leading hoarding by sellers. The rapidly rising exchange rate also makes fuel more expensive, but fuel prices have risen faster than the exchange rate.

Increased supply from China may come to stabilize fuel prices, but given global oil price increases, such deliveries to North Korea are increasingly costly for China as well.

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