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Chinese companies lift Australian coal orders as curbs tipped to end

Coal News - Published on Fri, 19 Apr 2019

Image Source: Business Insider
Sydney Morning Herald reported that Chinese private power companies have started to buy contracts for Australian thermal coal, which could signal an end to China’s import restrictions that have sent prices plummeting. China placed unofficial restrictions on Australian low-grade coal imports, forcing ships laden with thermal coal to go through onerous customs procedures. Other nations such as Indonesia have not faced the same restrictions. Opinion has divided on whether the restrictions have been driven by economic or political factors. Analysts said that the rise in new contracts may signal an end to the restrictions.

Credit Suisse analysts said that “Chinese independent non state owned power producers have started to buy May contracts at USD 57 to USD 58 per tonne. Australian low-grade coal has stabilised around USD 56 per tonne, much lower than the USD 64 per tonne it was fetching at the start of the year. It is not yet clear whether they are taking a risk on imports because it’s too cheap to ignore or they have been given the heads-up by authorities that the informal restrictions may be lifted in May. With this uncertainty, producers remain cautious about Chinese demand, as there remains a risk that importers may default on contracts if they misjudged, leaving distressed cargoes on the water. For the grades of coal China buys, the prospect is looking slightly better.”

Coal was Australia’s most valuable export in 2018 with China, Japan and South Korea the main customers.

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Posted By : Rabi Wangkhem on Fri, 19 Apr 2019
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