Archive for the ‘Oil’ Category

Fuel prices are dropping in North Korea, and that’s a little odd

Tuesday, July 10th, 2018

Benjamin Katzeff Silberstein

As in the rest of the country, gas prices continue to fall in Pyongyang, data from NK Pro shows, but remains much higher than the closest available month of 2017.

At the same time, recent figures from China state that its exports of refined fuel products to North Korea continues to remain well below the ceiling mandated by UN sanctions. Asia Press reports a slight increase of diesel prices in Yanggang and North Hamgyong provinces, but it’s a fairly minor one and the data by NK Pro and Daily NK still represents more data points. So what’s a plausible explanation here?

My best guess is that it’s a combination of increased smuggling, perhaps aided by China’s declining vigilance in enforcing sanctions and restrictions against illicit trade across the border. Gas prices shot up last spring when China decided to drastically cut sales of fuel products to North Korea, citing financial reasons (that North Korea wouldn’t be able to pay), but the decision was very likely influenced by political considerations as well. Now with the multitude of summits between Kim Jong-un and Xi Jinping, and Kim and Trump, China’s willingness to enforce sanctions with the same vigor as it did through the second half of 2017 and the first half of 2018 has likely waned, impacting matters like fuel prices as well. It also seems plausible that fairly small changes in supply could change prices quite drastically, since North Korea already consumes a relatively small amount of gasoline and diesel on the whole.

Another possibility is that Chinese flows of unrefined oil through the pipeline in northwestern North Korea, through Dandong and Sinuiju, have increased. These aren’t monitored in the same way as Chinese sales of refined fuel to North Korea, and as far as I know, could be increased without the international community easily noticing. These oil flows also aren’t part of regular trade between the countries, and should be regarded more as Chinese financial support to North Korea.

My best bet would be on a combination of these two factors, but there’s obviously much we don’t know about the development.

Update 2018-07-15: NK News reports some US government data seeming to hint at what’s been going on. At least 89 hip-to-ship transfers occurred between January and May, in violation of UNSC sanctions:

North Korea likely conducted at least 89 ship-to-ship transfers to illicitly obtain refined petroleum products between January 1 and May 30, U.S. data provided to the United Nations and seen by NK News on Friday claims.

Pyongyang may have illegally imported up to 1,367,628 barrels of refined petroleum as a result of the transfers, upper-end estimates suggested, over double the 500,000 barrels authorized for export to North Korea each year by current UN sanctions.

Consequently, the U.S. recommended that the UN 1718 sanctions committee issue a “public note verbale to all UN Member States to inform them that the DPRK has breached the UNSCR 2397 OP5 refined petroleum product quota for 2018,” and that all countries should “order an immediate halt to all transfers of refined petroleum products to the DPRK.”

Since the May 30 data cut-off, the Japanese government has revealed details surrounding three extra cases of North Korean vessels caught conducting likely ship-to-ship transfers, with two on June 21 and June 22, and one on June 29.

Article source:
N. Korea likely conducted 89 illicit ship-to-ship transfers in 2018: U.S. data
Chad O’Carrol
NK News
2018-07-13

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China’s exports of fuel to North Korea below UN sanctions ceiling

Friday, July 6th, 2018

By Benjamin Katzeff Silberstein

Between January and May, Chinese imports of refined oil products did not go over the ceiling mandated by UN sanctions, reports Voice of America (in Korean):

중국이 올해 1월부터 5월까지 북한에 제공한 정제유가 유엔이 정한 상한선의 한 달 허용치 수준에 그친 것으로 나타났습니다. 이 정도 수준을 유지한다면 유엔이 정한 정제유 수출 한도를 넘지 않을 것이라는 지적입니다. 김현진 기자가 보도합니다.

중국이 올해 1월부터 5월까지 북한에 정제유 5천921t을 공급한 것으로 나타났습니다.

유엔 안보리 산하 대북제재위원회 (1718 위원회) 홈페이지에 따르면 중국은 1월 201t, 2월 1천 392t, 3월 2천438t, 4월 437t, 5월 1천451t을 북한에 공급했다고 유엔에 보고했습니다.

5개월 총공급량을 배럴로 환산하면, 약 4만7천400 배럴로 유엔이 설정한 한 달 허용치를 조금 넘는 수준에 불과합니다. 연간 대북 정유공급 제한 50만 배럴을 12개월로 나누면 한 달에 4만 1천 배럴 정도입니다.

유엔 안보리는 지난해 12월 채택한 대북결의 2397호를 통해 북한으로 유입이 가능한 정제유의 상한선을 연간 50만 배럴로 정했습니다. 이전 결의가 상한선으로 정했던 200만 배럴에 비해 75%가 줄어든 것입니다.

아울러 올해 1월부터 각국이 북한에 판매하거나 제공한 원유와 정제유 양과 금액을 보고하도록 했습니다.

대북제재 전문가인 윌리엄 브라운 조지타운대학 교수는 중국이 올해 초부터 5월까지 북한에 제공한 정제유는 극히 소량으로, 유엔 결의를 잘 지키고 있는 것으로 보인다고 말했습니다.

[녹취: 브라운 교수] “The recent data provided to the UN from China suggest that they exported about 40,000 barrels to the North Korea in the first 5 months, that well below UN sanction limit…..”

또 올해 남은 기간 동안 이 정도 수준을 유지한다면 유엔이 정한 정제유 수출 한도를 넘지 않을 것으로 보인다고 말했습니다.

브라운 교수는 특히 김정은 국무위원장이 중국을 방문했던 5월 중국이 북한에 제공한 정제유도 소량에 불과했다고 지적했습니다.

[녹취: 브라운 교수] “The month after Kim’s visit to Beijing, China is still only shipping very small amount of refined products and it is still obeying the UN sanctions, according to China. But actually it’s very important that China is telling the world it is still obeying the sanctions… ”

자료에 따르면 중국은 5월 1천451t의 정제유 제품을 북한에 공급했습니다. 전 달 437t을 공급한 것에 비해 3배 이상 늘었지만, 지난 해 같은 기간6천400t에 비해 77% 감소한 규모입니다.

배럴로 환산해도 1만1천608배럴로 한 달 허용치에 크게 못 미치는 수준에 불과합니다.

앞서 헤더 노어트 국무부 대변인은 29일 폼페오 국무장관과 왕이 중국 외교부장과의 전화통화 소식을 전하면서, 폼페오 장관은 유엔이 금지하는 선박 환적을 통한 북한의 불법적인 석탄 수출과 정제유 수입과 관련한 유엔 안보리의 모든 대북 결의안에 대한 전면적 이행의 중요성을 강조했다고 전했습니다.

한편 올해 북한에 들어간 전체 정제유를 월별로 보면 1월, 569.62t에서 2월 3천274t으로 크게 늘었고 3월에는 1천t 이상 증가한 4천337t을 기록했습니다. 4월에는 437t으로 급감했다가 5월에는 다시 1천451t으로 세 배 이상 증가했습니다.

올해 1월부터 5월까지 북한에 수출된 정제유는 총 1만66t으로 집계됐습니다.

중국이5천921t, 러시아가 4천148t을 각각 북한에 제공했다고 신고했습니다. 중국과 러시아 외에 북한에 석유제품을 공급했다고 신고한 나라는 없습니다.

올해 북한에 수출된 정제유를 배럴로 환산하면 8만532 배럴로, 상한선의 15% 수준에 머물고 있습니다.

Article source:
유엔 “중국, 올 1~5월 북한에 정제유 5,921t 공급”…유엔 제재 상한선 크게 못 미쳐
Kim Hyun-jin
Voice of America
2018-07-06

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A Chinese ban on North Korean imports damages the North Korean economy

Tuesday, March 13th, 2018

Institute for Far Eastern Studies (IFES)

The North Korean economy is expected to face serious difficulties due to China’s ban on imports from North Korea. Having analyzed China’s sanctions against North Korea, KOTRA’s Korea Trade Center in Shenyang recently suggested that while North Korea depends overwhelming on China for its export, its exports are expected to plummet due to China’s measures.

After Pyongyang made its fifth nuclear test on February 18, 2017, China joined the sanctions imposed by United Nations Security Council (UNSC) Resolution 2321 and halted its import of North Korean coal until December that year.

Consequently, China’s import of North Korean coal was reduced by 60 percent compared to the same period in the previous year.

Furthermore, China imposed a complete ban on the import of coal, iron ore, lead and fishery products from North Korea, in accordance with the sanctions by UNSC 2371 adopted in response to North Korea’s IBCM launch on August 14, 2017.

Moreover, in response to North Korea’s sixth nuclear test on September 22 and the launch of an ICBM on January 5, 2018, China put a restriction on the export of refined oil, crude oil and refined petroleum products to North Korea.

The restriction on the export of refined petroleum products is expected to be a serious blow to the North Korean industry. Keeping China’s exports below 10 percent of total North Korean demand for the products, the new sanction will hit the North Korean economy across the board, ranging from industry, transportation, cargo transportation and power supply.

In addition, North Korean households, which have lower priority in power supply, would face increasing difficulties in getting electricity and heating. In the meantime, North Koreans may not suffer greatly from the shortage of oil because China has limited its export of crude oil to North Korea to its annual level of supply.

North Korea’s foreign exchange shortage is also expected to be aggravated following the shutdown of North Korean businesses in China and the repatriation of North Korean workers, both of which have been main sources of funds for the North Korean leader.

On September 28, 2017, the Chinese Ministry of Commerce announced that all existing North Korean businesses and joint ventures in China, including those managed solely by North Korean companies and individuals, should be closed by January 9, 2018.

In accordance with the notification of closure, the Shenyang Municipal Bureau of Industry and Commerce Administration issued a letter of notification to North Korean businesses and joint ventures in the city, leading to the shutdown of the Chilbosan Hotel and several North Korean restaurants.

In addition, North Koreans currently employed in China are allowed to remain while they have a valid visa, but have been asked to return to North Korea upon expiration of their visa.

Although the Chinese Ministry of Commerce completely prohibited the import of North Korean textile products on September 22, 2017, the import ban has created little export-ban effects to date, because cargo that has not completed the customs clearance procedure is excluded from the ban.

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North Korea’s ICBM-test, Byungjin and the economic logic

Tuesday, July 4th, 2017

By Benjamin Katzeff Silberstein

At 3:30PM GMT+9 on Tuesday July 4th, North Korean television announced that the country had successfully tested an intercontinental ballistic missile earlier in the day. Wall Street Journal:

The missile, identified as the Hwasong-14, was launched at a steep trajectory and flew 933 kilometers (580 miles), reaching an altitude of 2,802 kilometers, according to North Korean state television. The numbers are in line with analyses from U.S., South Korean and Japanese military authorities.

US Secretary of State, Rex Tillerson, later confirmed that the launched missile was an intercontinental ballistic one.

Here in Seoul, things seemed to continue on as usual, which tends to be the case in this city more than used to its fair share of similar news. The biggest strategic consequence, of course, is that for the US. A successful intercontinental ballistic missile of this sortcould potentially strike anywhere in Alaska.

With the latest launch, North Korea takes one step further along the nuclear side of the Byungjin lineof parallel development of nuclear weapons and the national economy, and arguably, one step back on the economic side of the dual-track policy. In the formulation of the Byungjin line, of course, both are interrelated. Missile launches are often described as evidence of progress in industry and science, ultimately benefitting economic progress. This launch was no exception. From KCNA:s statement yesterday, July 4th 2017 (my emphasis):

The success in the test-fire of inter-continental ballistic rocket Hwasong-14, final gate to rounding off the state nuclear force, at just one go is a powerful manifestation of the invincible state might and the tremendous capability of the self-reliant national defence industry of Juche Korea that has advanced at a remarkably rapid pace under the great Workers’ Party of Korea’s new line on the simultaneous development of the two fronts, and a great auspicious event to be specially recorded in the history of the DPRK which has long craved for powerful defence capabilities.

This launch happened in a context where North Korea is already under sanctions designed to strike at its coal exports, one of its most important sources of income, and where the US has just signaled its resolve to go after North Korea’s financial channels through secondary sanctions of Chinese entities. At the same time, Kim Jong-un’s tenure has very much come to be associated with some economic progress (albeit from a low level, and primarily benefitting the relatively privileged classes), symbolized by projects such as the recently opened Ryomyong street.

It is not yet clear what the consequences will be. The US will likely try to add more sanctions targeted against specific entities and persons that help North Korea evade sanctions, and acquire equipment for its nuclear and missile programs.

The US will probably also call for international sanctions, but as Chad O’Carroll points out, the US may have a hard time getting such measures through in a quick manner given its currently tense relationships with both Moscow and Beijing. The US may also further push Beijing to implement the already existing sanctions against North Korea, but nothing appears to have changed with the claimed ICBM-test that would fundamentally alter China’s strategic calculations in the region. In other words, it continues to regard North Korea as a buffer between itself and US forces in the region, and as a geopolitical asset.

Whatever happens, it is safe to assume that it will not be good news for North Korea’s international ties in diplomacy, trade, finance, you name it. It would be easy to assume that economic progress and nuclear weapons development are mutually exclusive, since the second leads to further international isolation and economic sanctions, and therefore hampers the first.

In reality, that may be true. The North Korean Byungjin narrative, that weapons developmenthelpseconomic progress, is difficult to swallow, especially when one considers the opportunity cost that the weapons programs carry, both in terms of domestic resource dedication and the cost in international isolation.

But there is another way to look at it. Whatever the actual consequences will turn out to be, North Korea is making a strategic calculation that the gains from the test, and from overall nuclear weapons and missiles development, will be greater than the potential costs and downsides. Consider the following two factors:

First, North Korea has made economic progress in the past few years, and particularly since Kim Jong-un came to power, even under years of severe sanctions. North Korea has been under various forms of UN Security Council sanctions since its first nuclear test in 2006. During these years, its economic development has been impacted far more by domestic policy decisions than by international developments.

Again, we are absolutely not talking about any growth miracle, and some probably exaggerate the degree of the wealth increase in North Korea over the past few years. But without a doubt, North Korea is far better off now than it was eleven years ago, and worlds apart from the famine of the 1990s. Food insecurity prevails in North Korea but the country has not seen widespread starvation since the late 1990s, and largely thanks to better economic frameworks (or rather less predatory), and increased space for private production and trade within the economic system, things are looking much better today than in many years.

Just look at this video recently published by the Daily NK, from Chongjin, one of North Korea’s largest cities in its northeast. Is this long-term, sustainable growth that will eventually lead North Koreans to enjoy the same prosperity as their counterparts in South Korea or even China? Probably not. But at least it’s something.

Second, and relatedly, North Korea likely has a significant amount of channels for trade and various transactions that are not commonly known, but that play highly significant roles for the economy. For example, consider the information that Ri Jong Ho, a former official in North Korea’s Office 39, supplied in a recent interview with Kyodo News. Ri claims that North Korea procures up to 300,000 tons of fuel and various oil products from Russia each year, through dealers based in Singapore. As a point of comparison, a commonly cited figure for crude oil supplies from China is 520,ooo tons per year. Proportionately, then, 300,000 tons is not close to a majority, but still a significant amount for North Korea. While intelligence services or others with access to classified information may have known this already, Ri’s claims, if true (they have not and in all likelihood cannot be fully corroborated),

The point here is that North Korea has gotten so used to going through back channels and unconventional means to acquire highly significant amounts of supplies required for its society to function. It is an economic system where unconventional (and often illicit) channels of trade are not exceptions, but core parts of the economic management toolbox. This is not to argue that sanctions do not or cannot work. Rather, it shows the extent to which unconventional methods are institutionalized within economic management in North Korea.

The North Korean government is no monolith, and there are almost certainly some parts of the governing apparatus that are more and less pleased with the ICBM-test. But in the higher echelons of the leadership, the strategic calculation is probably that even with the added sanctions that are very likely to come, North Korea will be able to continue along roughly the same economic strategies as it has thus far. Perhaps we can call it North Korea’s own “strategic patience”: continuing with patchwork strategies for international economic relations, with little concern for the impact of lack of sustainable growth on people’s livelihoods, while banking on eventual recognition as a nuclear power. Only time will tell whether targeted secondary sanctions will change that calculation.

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Ri Jong Ho, high-level defector and former official in Office 39, says North Korea gets much more oil from Russia than previously known

Saturday, July 1st, 2017

Benjamin Katzeff Silberstein

In a fascinating interview by Kyodo News’s Tomotaro Inoue, Ri Jong Ho, a former high-level official in Office 39 of the Korean Worker’s Party, makes several fascinating claims about the supply of fuel to North Korea:

North Korea secures up to 300,000 tons of oil products from Russia each year through Singapore-based dealers, a defector who formerly managed funds for the leadership has told Kyodo News, posing a challenge for the United States as it seeks to isolate Pyongyang.

“North Korea has procured Russia-produced fuel from Singapore brokers and others since the 1990s…It is mostly diesel oil and partly gasoline,” Ri Jong Ho, 59, a former senior official of Office 39 of the Workers’ Party of Korea, said recently in the U.S. capital in his first interview with media under his own name.

Ri also said North Korea relies more on Russia than China for fuel to keep its economy moving, indicating that the U.S. drive for Beijing to restrict oil supplies over Pyongyang’s nuclear and missile programs will only have a limited effect.

“It is a wrong perception that North Korea is completely dependent on China,” he said.

Petroleum products have been shipped to North Korea by tankers leaving Vladivostok and Nakhodka, both in the Russian Far East, with the fuel widely used for cars, ships and trains, helping to support the North’s economy, Ri said.

Other sources familiar with the fuel deals said the petroleum products ending up in North Korea are often purchased by brokers who claim they are destined for China, with the items procured using forged paperwork.

Ri, who defected to South Korea with his family in October 2014, provided details of the activities of Office 39.

The secretive entity, said to have been established by former North Korean leader Kim Jong Il in May 1974, is subject to international sanctions as the United States and other Western countries believe it is engaged in illicit economic activities and the management of slush funds for the leadership.

He said North Korea has been trying to reduce its economic reliance on China, Pyongyang’s most important benefactor, since leader Kim Jong Un issued an order to expand trade with Russia and Southeast Asian countries in August 2014.

The order followed Chinese President Xi Jinping’s visit to South Korea a month earlier, during which he and then South Korean President Park Geun Hye expressed opposition to North Korea’s nuclear weapons development. It was the first time for a Chinese president to visit South Korea before traveling to the North.

Ri said the North Korean leader was “infuriated” by the visit, going so far as to call China an “enemy state,” and began taking measures to boost trade with Russia.

According to Ri, Office 39 has five central groups and systematically acquires foreign currency by sending laborers overseas as well as through gold mining and exports.

“It is an organization that manages the supreme leader’s coffers and the party’s funds to rule the country. It also leads trade activities to earn foreign currency,” Ri said. The office has enormous power as it is directly linked to the leadership and is independent of other government organs, he added.

Ri admitted that Office 39 has evaded U.N. sanctions by asking Chinese and Russian contacts to allow the use of their names for the opening of bank accounts for trade settlement.

The activities of Office 39 require the involvement of hundreds of thousands of people, including those in rural areas who produce items for export. Ri said the bureau is now headed by Chon Il Chun, first vice department director of the party’s Central Committee and a former classmate of Kim Jong Il, the current leader’s father.

A native of Wonsan on North Korea’s east coast, Ri was told to work in Pyongyang by the Central Committee in the mid-1980s. He operated a shipping company at Office 39’s Daehung group and later headed a trade control section in the group between 1998 and 2004.

The Daehung group earns revenue through farm exports and shipping operations, among other means. With exclusive rights to trade “matsutake” mushrooms and snow crabs, it was actively shipping those products to Japan before Tokyo imposed a total ban on trade with the North about 10 years ago.

The four other central groups are Kumgang, which dominates gold export activities, Daesong, involved in the shipment of processed products and intermediate trade overseas, Daesong Bank, in charge of the office’s banking operations, and a group dispatching workers to other countries.

Asked about the possibility that the foreign currency earned by North Korea is being used for its nuclear and missile development programs, Ri only said, “It is up to the supreme leader how to use the funds.”

North Korea receives 500,000 tons of crude oil each year through a pipeline from China, resulting in around 70,000 to 100,000 tons of gasoline and about 100,000 tons of diesel oil after refining, but the oil products are exclusively used by the North Korean army and are not good enough for cars that carry the elite, Ri said.

He also said crude oil purchased from other countries is refined by foreign companies based in China, leading to the importation into North Korea of an additional 50,000 to 100,000 tons of gasoline.

Full article here:
N. Korea procuring Russian fuel via Singapore dealers: defector
Tomotaro Inoue
Kyodo News
2017-07-28

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CNPC suspends fuel exports to North Korea

Wednesday, June 28th, 2017

Benjamin Katzeff Silberstein

In late June, Reuters reported that the Chinese state-owned enterprise, China National Petroleum Corporation, had suspended its exports of fuel to North Korea, ostensibly because of concerns that North Korean buyers would not be able to pay:

China National Petroleum Corp has suspended sales of fuel to North Korea over concerns the state-owned oil company won’t get paid, as pressure mounts on Pyongyang to rein in its nuclear and missile programmes, three sources told Reuters.

It’s unclear how long the suspension will last. A prolonged cut would threaten critical supplies of fuel and force North Korea to find alternatives to its main supplier of diesel and gasoline, as scrutiny of China’s close commercial ties with its increasingly isolated neighbour intensifies.

CNPC and the Ministry of Commerce did not respond to requests for comment. North Korea’s embassy in Beijing declined to comment.

Chinese foreign ministry spokesman Lu Kang, asked about the sale suspension and whether the Chinese government put pressure on CNPC to make this decision, said: “I do not understand this situation you are talking about” and declined to elaborate.

A source with direct knowledge of the matter said CNPC decided to put fuel sales on hold “over the last month or two” and described it as a “commercial decision”.

“It’s no longer worth the risks,” said the source. Chinese and international banks are stepping up compliance checks on companies dealing with countries on the U.S. sanctions list, such as North Korea, he said.

The North Korean agents who mostly buy the diesel and gasoline have been unable recently to pay for the supplies — CNPC normally requires upfront payments, the source said.

Reuters was unable to determine if the agents have started facing credit problems with Chinese and international banks worried about sanctions compliance issues.

Two other sources briefed about CNPC’s decision confirmed the suspension of diesel sales, but did not know directly about the gasoline move. The three people declined to be named due to the sensitivity of the matter and are not authorised to speak to the media.

PRICES SURGE IN NORTH

Last year, China shipped just over 96,000 tonnes of gasoline and almost 45,000 tonnes of diesel worth a combined $64 million to North Korea, where it is used across the economy from fishermen and farmers to truckers and the military.[O/CHINA4]

Most of that was sold by CNPC, which has grown over the past two decades to dominate China’s energy trade with Pyongyang.

Data for May released on Friday showed China supplied significantly lower volumes of diesel and gasoline compared with a month earlier, although monthly tonnages can vary widely. June data will be released in late July.

Fuel prices in North Korea, meanwhile, have sharply risen in recent months, suggesting a tightening in supply.

A Reuters analysis of data collected by Daily NK showed the price of gasoline sold by private dealers in Pyongyang and the northern border cities of Sinuiju and Hyesanhad hit $1.46 per kg on June 21, up almost 50 percent from April 21. Until then, they had remained relatively stable since late last year.

Diesel prices averaged $1.20 per kg as of June 21, more than double over the same period, according to Daily NK,a website run by defectors who collect prices via phone calls with North Korean fuel traders.

Full article:
Exclusive: China’s CNPC suspends fuel sales to North Korea as risks mount – sources
Chen Aizhu
Reuters
2017-06-28

This does not seem to imply that the CNPC altogether halted crude oil deliveries to North Korea, only deliveries of fuel purchased on a commercial basis. And usually, the first follow-up question to ask in reaction to news of China halting deliveries of supplies X, or the imports of good Y, is “for how long”?

These deliveries may of course have happened on other contracts, but NK Pro reports continued North Korean oil tanker presence in Chinese oil terminals in both May and June.

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DPRK-Russia trade in 2014

Wednesday, March 18th, 2015

UPDATE 1 (2015-3-18): Although overall trade volume between the DPRK and Russia was down in 2014, North Korea’s exports to Russia were up. According to Yonhap:

North Korea’s exports to Russia soared nearly 32 percent in 2014 from a year earlier, a report showed Wednesday, amid Pyongyang’s efforts to bolster ties with Moscow.

According to the report by the Korea Trade Investment Promotion Agency, North Korea’s outbound shipments to Russia reached US$10.17 million in 2014, up 31.9 percent from a year earlier.

By item, textile exports came to $4.7 million, or 46.2 percent of the total, followed by machinery with $1.6 million, musical instruments with $1.37 million and electrical equipment with $670,000.

Pyongyang also sold $250,000 worth of cars to Russia last year, 2.3 times more than the previous year, with shipments of optical devices soaring more than 60 times to $190,000.

Bilateral trade volume, however, fell 11.4 percent on-year to $92.34 million last year as Pyongyang’s imports from Russia shrank 14.9 percent to $82.17 million.

Crude imports dropped 7.9 percent on-year to $33.98 million last year, taking up the largest 41.7 percent share of the total imports.

“North Korea has been striving to strengthen economic cooperation with Moscow, though it will take time for the North to diversify its trade markets due to its heavy dependence on China in the past,” said Cho Bong-hyun, a senior research fellow at the state-run Industrial Bank of Korea (IBK) in Seoul.

Last year, more than 90 percent of its exports were bound for China. Bilateral trade between North Korea and China, however, fell 2.4 percent from 2013 to $6.39 billion in 2014, marking the first annual decline since 2009, according to Seoul data.

The 2014 figure is seen as signaling that the strained political ties between the two nations, particularly after the North’s third nuclear test in February 2013, have affected their economic relations.

Amid such languid ties with Beijing, North Korea has been ramping up efforts to forge a closer relationship with Russia, with the two nations declaring 2015 as a year of friendship.

ORIGINAL POST (2014-12-4): According to Yonhap, trade between North Korea and Russia (imports and exports)dropped significantly in the first three quarters of 2014:

Trade between North Korea and Russia dropped significantly this year, despite Pyongyang’s efforts to step up economic cooperation with Moscow, data showed Thursday.

Russia’s exports to North Korea reached US$59.01 million in the first nine months of this year, down 10.1 percent from the same period last year, according to the data by the Vladivostok office of the state-run Korea Trade-Investment Promotion Agency (KOTRA).

In particular, Russia’s exports of flour to North Korea plunged 72.2 percent on-year to $770,000.

Russia’s imports from its neighbor also fell 7.9 percent on-year to $6.46 million during the January-September period.

North Korea’s imports of electronics and coal from Russia also tumbled 61 percent and 44.6 percent, respectively, according to the data.

Russia’s imports of North Korean nuclear reactors, boilers and other machinery, meanwhile, shrank 57.1 percent on-year to reach $451,000,

Bucking the overall decline, Russia’s imports of North Korea-made clothes soared 35.5 percent on-year to $3.61 million, maintaining an uptrend of recent years.

North Korea has been intensifying efforts to expand economic cooperation with Russia, recently deciding to use the Russian ruble as a trade currency as well as launching a fledgling logistics project to link Russia’s border city of Khasan to the North’s port of Rajin.

Read the full story here:
N. Korea-Russia trade shrinks this year
Yonhap
2014-12-4

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DPRK-China trade in 2014

Monday, January 26th, 2015

According to Yonhap, DPRK-China trade drops slightly in 2014:

North Korea’s annual trade with its economic lifeline, China, fell 2.4 percent from a year ago in 2014, marking the first decline since 2009, data compiled by South Korea’s government trade agency showed Monday.

North Korea’s trade with China totaled US$6.39 billion last year, compared with $6.54 billion in 2013, according to the data provided by the Beijing unit of South’s Korea Trade and Investment Promotion Agency (KOTRA).

The annual trade figures between North Korea and China provided a fresh sign that strained political ties between the two nations have affected their economic relations.

At least on paper, there were also no shipments of crude oil from China to North Korea for all of last year.

A South Korean diplomatic source with knowledge of the matter, however, cautioned against reading too much into the official trade figures because China has provided crude oil to North Korea in the form of grant aid and such shipments were not recorded on paper.

Here is coverage in the Daily NK.

I have been unable to locate the KOTRA report, but the Choson Ilbo adds this:

China’s exports to the North were down 3.1 percent on-year and its imports from the North 1.5 percent, the diplomatic source in Beijing said quoting Chinese trade statistics.

Yonhap followed up with this from a Chinese foreign ministry press briefing:

Asked about the official absence of crude oil delivery to North Korea, China’s foreign ministry spokeswoman, Hua Chunying, referred the question to “competent authorities.”

“You mentioned a specific issue concerning trade between China and North Korea. I would like to refer you to competent authorities,” Hua told reporters during a regular press briefing.

“But, I want to highlight that the economic cooperation and trade between China and North Korea are normal,” Hua said.

Yonhap also provided the following information on oil shipments from China to the DPRK:

In previous years, China’s official shipments of crude oil to North Korea had been absent for several months, particularly after the North’s nuclear tests. However, it was extremely unusual that, at least on paper, China sold no crude oil to North Korea for all of last year.

In 2014, China’s exports of petroleum products to North Korea jumped 48.22 percent from a year earlier to US$1.54 million, according to the data based on Chinese trade statistics and compiled by the Beijing unit of South’s Korea Trade and Investment Promotion Agency.

“Although final statistics show that China’s exports of crude oil to North Korea were counted as ‘zero’ in 2014, experts suggest that the possibility of China’s suspension of crude oil exports to North Korea remains low,” the agency said in a statement.

South Korean diplomatic sources in Beijing have also cautioned against reading too much into the official Chinese trade figures because China has provided crude oil to North Korea in the form of grant aid and such shipments were not recorded on paper.

There has been no clear indication that the 2014 trade figures reflect China’s willingness to use crude oil as leverage to press North Korea to change course in its nuclear ambition.

Yonhap (via Korea Times) also reports that anthracite exports to China are down in 2014:

North Korea’s exports of anthracite to China tumbled nearly 18 percent in 2014 from the previous year, the first annual drop in eight years, data showed Friday.

North Korea exported US$1.13 billion worth of anthracite to China last year, down 17.6 percent from a year earlier, according to data from the Korea International Trade Association.

It was the first on-year decline in North Korea’s anthracite exports to China since 2006.

The volume of anthracite exports also decreased 6.4 percent on-year to 15.43 million tons last year, according to the KITA.

Despite the drop, anthracite accounted for 39.8 percent of North Korea’s total exports to China in 2014.

According to the data, North Korea’s exports of iron ore to China plunged 25.7 percent on-year to $218.6 million last year, the smallest amount since 2010.

For lots more data on the DPRK’s international trade, see also these eight great posts:
1. North Korea-China Trade Update: Coal Retreats, Textiles Surge
2. How Has the Commodity Bust Affected North Korea’s Trade Balance? (Part 1)
3. How Has the Commodity Bust Affected North Korea’s Trade Balance? (Part 2)
4. Nicholas Eberstadt’s “Dependencia, North Korea Style” (I would have gone with “Our Style Dependencia”)
5. NK News on coal shipments in 2014.
6. Radio Free Asia on coal shipments.
7. N. Korea’s smartphone imports from China hit record
8. China’s exports of jet fuel to N. Korea rebounds in 2014

Read the full story here:
N. Korea’s 2014 trade with China marks 1st drop in 5 years
Yonhap
2015-1-26

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DPRK oil imports from China in 2014 (UPDATED)

Tuesday, November 4th, 2014

UPDATE 8 (2014-11-14): Yonhap speculates on Chinese oil exports to the DPRK:

China appears to be continuing to provide North Korea with crude oil, contrary to its customs data, officials here said Friday.

China exported not a single drop of crude oil to North Korea in the first nine months this year, according to formal data.

If true, it might reflect widespread speculation that the relations between the communist allies have been strained to some extent due to Pyongyang’s repeated provocative acts.

South Korean officials, however, believe China is continuing to send crude oil to North Korea either in hidden trade or in the form of aid.

“Without China’s provision of crude oil, the operation of many of North Korea’s industrial facilities and vehicles would be suspended. But there has been no such indication yet,” an intelligence official said.

Beijing may be deliberately excluding its crude oil shipments to Pyongyang from the customs data in a bid to give the world the impression that it is joining the international community’s efforts to put pressure on it, another government official said.

He dismissed the view that the North has replaced China with Russia as its main source of crude oil imports.

“North Korea has brought in more crude oil from Russia this year, but the total amount is still less than 100,000 tons,” he said.

North Korea used to import an annual average of half a million tons of crude oil from China. (Yonhap)

UPDATE 7 (2014-11-4): According to Yonhap, North Korea’s jet fuel imports from China have begun to rebound this year.

North Korea imported 13,000 tons of jet fuel from China between January and September, a sharp rise from 359 tons in the same period last year, the unification ministry official told reporters.

But the amount is still far short of past tallies: 38,000 tons in the same period of 2011 and 39,000 tons in that of 2012, he noted, citing formal data from China’s customs authorities

UPDATE 6 (2014-8-23): For what it is worth, China recorded zero oil exports to North Korea in July. According to Yonhap:

According to the Chinese data analyzed by the Beijing unit of the Korea Trade and Investment Promotion Agency, there were no shipments of crude oil from China to North Korea from January to July.

Diplomatic sources with knowledge of the matter cautioned against reading too much into the official trade figures because China has been providing crude oil to North Korea in the form of grant aid and such shipments have not been recorded on paper.

In the first seven months of this year, China’s exports to North Korea rose 1.8 percent from a year ago to US$1.95 billion, while imports fell 4.3 percent to $1.57 billion, according to the data.

UPDATE 5 (2014-8-4): The Hankyoreh weighs in on Chinese oil exports to the DPRK:

However, there are also other experts who counter that suspending the supply of crude oil ought not to be read as a sign of deteriorating relations between North Korea and China. They say that, while the statistics read zero, the supply of crude oil is actually continuing. In fact, the price of gasoline and other petroleum products in North Korea remains stable, reports have indicated.

Radio Free Asia reported that gasoline was selling recently for around 10 to 11 won per kilogram at North Korea’s markets, around the same as the 11 won price from 2012. The price of diesel also remained steady at 6 to 7 won, the broadcaster said.

The South Korean government believes that while China may have reduced its crude oil exports, it is continuing to supply North Korea with oil as a form of aid. “China has been supplying North Korea with 500,000 tons in trade, along with a similar amount of free oil. It appears to be providing North Korea with enough crude oil to prevent problems from occurring in North Korean society,” said a senior Ministry of Unification official on condition of anonymity.

But many experts believe that relations between North Korea and China are not in such a bad state that China would shut off the supply of crude oil. “Relations between North Korea and China are not normal, but they should not be seen as especially bad, either. From the viewpoint of a superpower, China appears to be steadily observing North Korea’s behavior, without grief or joy,” said Lee Hui-ok, professor at Sungkyunkwan University.

Indeed, aside from interaction between senior officials, other sectors appear to be operating normally without any major disturbances. Trade between North Korea and China in the first half of the year remained at levels similar to 2013. Chinese exports to the North from January to May of this year were US$1.27 billion, down slightly from US$1.33 billion last year. But a big rebound in June brought the first half figures up to US$1.58 billion, nearly the same as the US$1.59 billion posted last year.

In the area of tourism, China also appeared to be taking a more aggressive attitude in the first half of the year than in 2013, running new tourism programs using bicycles and trains, reports said. In the area of personnel exchange, working-level contact is continuing, despite the lack of meetings between senior officials.

“There are virtually no senior political officials from North Korea visiting China. However, technical and economic officials continue to visit China for inspections and training,” said an official at the South Korean embassy in China, on condition of anonymity.

“It is dangerous to read too much into the temporary fluctuations and the sluggish mood recently affecting relations between North Korea and China. That would be a false diagnosis of their relationship,” said Lee Nam-ju, professor at Sungkonghoe University.

“Since North Korea and China understand each other, it does not appear likely that their relations will be suddenly damaged,” Lee said.

UPDATE 4 (2014-7-14): NK News reports on Chinese petrol exports to the DPRK:

China has increased deliveries of oil products to North Korea during the first five months of 2014 according to the latest Chinese customs data, which also confirms the widely reported halt in crude oil shipments.

However, data from the Chinese General Administration of Customs shows that the oil-products being delivered to North Korea only cover a fraction of the supplies of crude once shipped, with total deliveries falling by over 60 percent.

Experts were unsure over whether this constituted a warning from Beijing in response to North Korea’s regional provocations or whether the slow-down was due to the DPRK’s aging refineries. Crude oil must be refined into petroleum products such as fuel oil, diesel and aviation fuel before being used.

In total, China exported more than 88,000 tons of refined products to the DPRK between January and May 2014, with more than half of the growth caused by spikes in gasoline and kerosene shipments. Gasoline, is primarily used as a fuel for motor vehicles, while kerosene is used to power jet engines and as a heating fuel in North East Asia.

“[This] is somewhat over half of the recorded exports from China to the DPRK in 2010, and somewhat over a quarter of the net petroleum products imports that we estimated for the DPRK from all nations in 2010.  So there may be a real shift in petroleum products exports going on,” David Von Hippel a Senior Associate at the Nautilus Institute for Security and Sustainability told NK News.

Kerosene, used as an aviation fuel, saw the sharpest spike in exports increasing by 5131% when compared to the same period last year. The North Koreans imported more than a hundred thousand barrels, mostly in one bulk shipment in March, amidst news published in early July by Reuters that the DPRK was looking to restart domestic flights.

Gasoline exports also rose by 84% to approximately 280 thousand barrels when compared to the  January – May period in 2013.

DPRK imports of diesel rose to 63,000 barrels and mark the first time China has exported the petroleum product since 2011, although no data is available before this point. The exports remain at a low level however, representing only a few percent of total DPRK yearly usage.

China also upped exports of Butane by 28%, which is used primarily as fuel gas or in gasoline blending. “[Butane] is more likely used as an input to bottled gas (for example, liquefied petroleum gas, LPG), which is, we have heard, increasingly used for cooking in urban households that can afford it in the DPRK.” Von Hippel told NK News.

UPDATE 3 (2014-5-24): This Daily NK article further highlights why we should be skeptical of official reports of the DPRK’s oil imports from China:

Daily NK has confirmed that China is currently supplying oil to North Korea through a pipeline running between the two. Though there have been cases where Beijing has suspended such shipments in response to North Korean intransigence, particularly over nuclear issues, but this has not happened recently.

On April 10th, Daily NK visited an oil storage and pipeline facility in Dandong. There, our team interviewed Chinese Ministry of Public Security officials guarding the facility, which is owned by a subsidiary of China National Petroleum Corporation, or CNPC.

When asked about oil assistance to North Korea, one of the officers acknowledged, “We are continuously supplying oil (to North Korea),” but “cannot say how much we send each month or how much remains as of now.”

Oil deliveries to be transferred to North Korea are received at this facility from a larger nearby facility, Basan, and then are shipped to a partner storage facility at Baekma in Pihyun Couunty, North Pyongan Province. The pipeline is 11km long.

According to sources, these deliveries are not recorded in Chinese customs data, or in foreign trade statistics. The oil from the pipeline is rather characterized as de facto aid, either in the form of low interest loans or free of charge.

This is why, on April 24th, Korean agency KOTRA released a figure of ‘zero’ for oil exports from China to North Korea for the first quarter of 2014, basing it on Chinese customs data. The data says zero for commercial transfers; however, supplies in the form of aid and assistance may not have stopped at all.

In this regard, a diplomatic source said, “China has the ability to stop the oil supplies whenever they want, but they’ve never done so for a long period of time.” He went on, “Above all, China places as much importance on security as North Korea places on nuclearization, and it doesn’t want to see disorder in the North Korean regime. This explains why China keeps providing this assistance.”

Meanwhile, Chinese trade statistics show that 520,000 tons of oil was exported to North Korea every year from 2009 to 2012. Mostly small North Korean tankers shipped this oil.

UPDATE 2 (2014-5-26): The DPRK officially did not import any oil from China as of April 2014. According to Yonhap:

China sold no crude oil to North Korea in the first four months of this year, data compiled by South Korea’s government trade agency showed Monday, in an unusual four-month absence of oil shipments amid the North’s threats of a nuclear test.

The Beijing unit of the South’s Korea Trade and Investment Promotion Agency (KOTRA) said in a report, citing data from China’s customs authorities, that there were no oil shipments from China to North Korea from January to April this year.

A four-month absence of oil shipments from China to North Korea was also reported in 2009, when the North conducted its second nuclear test.

However, a diplomatic source in Beijing cautioned against reading too much into the official trade figures.

“The Chinese side has provided crude oil to North Korea in the form of grant aid, which is not recorded on paper,” the source said on condition of anonymity.

North Korea also appears to have been trying to diversify its source of oil imports, through countries such as Russia, the source said.

UPDATE 1 (2014-4-24): DPRK official imports from China in Q1 of 2014: zero.

According to Yonhap:

China did not export any crude oil to North Korea in the first three months of this year, data compiled by South Korea’s government trade agency showed Thursday, in an unprecedented three-month absence of oil shipments amid North Korea’s threats of a nuclear test.

Monthly shipments of crude oil from China to North Korea were absent in February, June and July last year, but it was the first time that China apparently stopped exports of crude oil to North Korea for three consecutive months.

The Beijing unit of the South’s Korea Trade and Investment Promotion Agency (KOTRA) said in a report, citing data it collected from China’s customs authorities, that there were no oil shipments from China to North Korea from January to March this year.

“To my knowledge, it is the first time that China did not export crude oil to North Korea for three consecutive months and that would impact the North Korean economy,” a diplomat at the South Korean Embassy in Beijing said on the condition of anonymity.

Also worth highlighting from the report:

China’s total trade with North Korea fell 2.83 percent to US$1.27 billion in the January-March period, compared with the same period a year ago, according to the KOTRA report.

Additional information:

1. DPRK – China trade statistics following the Jang Song-thaek purge.

2. DPRK – China trade at all time high in 2013.

3. DPRK diversifying energy sources.

4. DPRK does not import any oil from China in January 2014.

Read the full Yonhap story here:
China didn’t export crude oil to N. Korea in Q1
Yonhap
2014-4-24

ORIGINAL POST (2014-3-10): DPRK oil imports from China in January 2014: Zero!

According to Yonhap:

North Korea did not import any crude oil from China in January, marking the first absence of monthly deliveries from China in five months, a Seoul government report showed Monday.

It was not immediately clear whether the January absence of crude shipments to North Korea from China was linked to Beijing’s growing frustration with Pyongyang over its nuclear program, but it followed the execution of the once-powerful uncle of North Korean leader Kim Jong-un last December.

Last year, monthly shipments of crude oil from China to North Korea were absent in the months of February, June and July. However, annual shipments of crude oil to North Korea from China rose 11.2 percent on-year to 578,000 tons in 2013.

Read the full story here:
No crude import from China to N. Korea in Jan.: report
Yonhap
2014-3-10

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DPRK -china trade dips slightly in H1 2014

Monday, August 4th, 2014

According to the Institute for Far Eastern Studies (IFES):

Grain Imports Decrease, Rare-Earth Mineral Exports Increase in the First Half of 2014

It has been reported that Chinese grain imports in North Korea have fallen drastically in the first half of 2014. According to the Korean Foreign Trade Association (KFTA), Chinese exports of grain to North Korea totaled 58,387 tons in the first half of 2014, totaling a mere 47 percent of the grain exported in the first half of the previous year (124,228 tons).

China’s most heavily exported grain product to North Korea is flour, which made up 68.8 percent (40,142 tons) of all total grain exports for the first half of 2014. China also exported 13,831 tons of rice and 3,420 tons of corn to North Korea. Corn exports did not even reach twenty percent of the amount exported at the same time last year (17,655 tons).

It is postulated that China’s sharp decrease in grain exports to North Korea is due to the souring relations between the two nations in 2014. Another theory is that the decrease in exports could be due to North Korea’s recent increase in agricultural productivity over previous years.

In the first half of 2014 China exported 109,531 tons of fertilizer to North Korea, 21.3 percent less than the amount exported during the same timeframe last year (139,161 tons). In the first three months of 2014, North Korea aggressively imported Chinese fertilizer at a rate of twenty thousand tons over its monthly average. However, this decreased markedly in the months of April, May and June.

Meanwhile, North Korea has been exporting large quantities of rare-earth resources (which are used in manufacturing high-tech products) to China over the last few months. Reportedly, in May of 2014, North Korea exported 550,000 dollars’ worth of rare-earth ore to China. This figure more than doubled the following month, reaching 1.33 million USD in June.

This comes as a bit of a surprise, as North Korean rare-earth resource exports to China had come to a standstill after the first round of exports (totaling 24.7 thousand USD) in January 2013. Suddenly, after fifteen months, North Korea has exported 1.88 million USD worth of rare-earth ore (approx. 1.93 billion KRW, 62.66 thousand kilograms) over the last two months.

Since 2011, North Korea has in fact been exporting rare-earth carbonate mixtures to China; however total exports of these products have only reached 170 thousand USD over the last three and a half years.

North Korea has been placing attention on these underground rare-earth resources, of which the nation reportedly has ample quantities of in various deposits around the country. Recently, much effort has been put into surveying for deposits of these so-called “vitamins of the 21st century’s high-tech industry.” In 2013 a company for the development of rare-earth materials in North Pyongan Province was established with the cooperation of the international private equity firm “SRE Minerals.”

In July 2011, the Choson Sinbo, a news affiliate of the General Association of Korean Residents in Japan, reported in an interview with top executives from the National Resources Development Council that rare-earth resource deposits in North Korea total approximately 20 million tons. The drastic increase seen in rare-earth resource exports can be attributed to North Korea’s attempt to diversify its resource exports. In other words, the DPRK is investing in rare-earth material exports in order to reduce its dependency on other leading mineral exports such as anthracite, iron ore, and lead.

Exports of anthracite to China decreased by 23 percent in the first half of 2014 (compared to last year), totaling approximately 571 million USD. Iron ore exports, North Korea’s second leading resource export, reached approximately 121 million USD in the same time period – a drop of 5 percent when compared to the same time period last year.

According to the Korea Herald (Yonhap):

North Korea’s trade with its economic lifeline China fell 2.1 percent on year to US$2.89 billion in the first six months of this year, data compiled by South Korea’s government trade agency showed Monday, in another sign that strained political ties between the two nations have affected their economic relations.

During the six-month period, North Korea’s exports to China declined 3.9 percent to $1.31 billion and imports slipped 0.6 percent to $1.58 billion, according to the data provided by the Beijing unit of South’s Korea Trade and Investment Promotion Agency (KOTRA).

There were no shipments of crude oil from China to North Korea from January to June, the data showed.

“Despite the six-month absence of oil shipments, the scale of North Korea’s decline in imports is minimal,” the source said on condition of anonymity.

Meanwhile, North Korea’s exports of rare earth to China jumped 153.7 percent on year during the January-June period, the data showed, without providing the value of the exports.

Read the full story here:
N. Korea’s trade with China falls 2.1 pct in H1
Korea Herald (Yonhap)
2014-08-04

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