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Delays grow for Australian coking coal into China

Coal News - Published on Thu, 14 Feb 2019

Image Source: The Australian
Argus Media reported that Chinese customs has slowed cargo declarations processing for all Australian coal cargoes berthed and waiting to berth at Chinese ports. There has been no official announcements or documentation so far regarding the matter. But a meeting held by Chinese customs in Rizhao, Shandong province just before the lunar new year holiday on 1 February revealed that the waiting times for all vessels preparing to unload Australian coal at Rizhao port will be as long as 50-60 days, sources with knowledge of the matter said.

Market participants have stressed that there is no outright ban on Australian coal, but the measures are an indirect way of discouraging domestic steel producers from importing coal of this origin.

Multiple steel producers have received hints from Chinese customs officials before the start of the lunar new year celebrations that they should try to avoid importing Australian coal whenever possible, but did not elaborate further.

While China does produce some coking coal domestically, the low sulphur and low ash qualities of Australian coking coal are difficult to match, a south China steel producer said. For that reason, some Chinese steel producers imported Australian coal late last year despite similar long waiting times for customs processing, posting significant demurrage costs in the process.

There is still much uncertainty over the future direction of seaborne coking coal prices as the Chinese market has just reopened after the lunar new year holidays last week.

But Chinese steel mill margins are getting increasingly squeezed by a rally in iron ore prices, as Brazilian iron ore mining firm Vale cut output by 10pc after decommissioning 10 tailings dams in Brazil. This was done in response to the failure of a similar tailings dam at the Feijao mine late last month that left more than 100 people dead.

Tightening margins could make steel producers less willing to buy even higher quality Australian seaborne coking coal as they fight to reduce costs, an Australian trader said.

Source :

Posted By : Rabi Wangkhem on Thu, 14 Feb 2019
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