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China Bans on Australian Thermal & Coking Coal Imports Informally

Coal News - Published on Tue, 13 Oct 2020

Image Source: China Bans Coal Import
Australia is investigating media reports that China has stopped taking its coal shipments. Speaking on breakfast television Australian Trade Minister Simon Birmingham said the government was seeking a response from China while noting that coal flows to the country had been disrupted in recent years. He said We are aware of these reports and have had discussions with Australia’s resources industry, who have previously faced occasional disruptions to trade flows with China. Australia will continue to highlight our standing as a reliable supplier of high grade resources that provide mutual benefits.”

As per media reports, China has reportedly banned imports of Australian thermal and coking coal, leaving some Australian vessels stuck at Chinese ports. Chinese authorities communicated the ban verbally, suggesting the informal approach is politically motivated, though it also aligned with tightening coal import quotas and China’s goal to reduce consumption and carbon emissions. On October 8, IHS Markit reported that authorities at ports in Bayuquan and Jingtang in northern China and Fangcheng in the south had told buyers that Australian cargo would be rejected from discharge and clearing, effective October 1.

A Platts report said that the number of vessels waiting at Chinese ports has increased quite a bit of late and reports have suggested that as much as 7 million tonnes of coal are on board vessels waiting along Chinese coast, up from the usual 4 to 5 million tonnes normally seen during this period of time along the coast. China is less reliant on Australian coal imports compared with iron ore, therefore we have little reason to doubt that this verbal warning could persist for an indefinite period

The ban comes amid deteriorating trade relations between the two countries after Australia called in April for an investigation into the origins of the coronavirus. China has since imposed a large anti-dumping duty on Australian barley, banned beef exports from five abattoirs and instigated anti-dumping and subsidy investigations into cheap Australian wine in China.

This is the second time this year that China has banned Australia coal imports. In May, after the announcement of beef and barley sanctions, China’s National Development and Reform Commission prohibited the purchase of Australian thermal coal to boost domestic coal prices. While there were strong suspicions the ban was politically motivated, China’s domestic coal market had problems with supply and oscillating prices earlier this year, forcing authorities to restrict imports to control local conditions.

China is the biggest importer of Australian coal, taking 27% of its metallurgical coal in the year to June and 20% of its thermal coal. Coal was Australia’s second-largest export last year, behind iron ore, worth AUD 55 billion. China's high-quality coking coal production is scarce and so steelmakers in the country depend on overseas suppliers, with Australia accounting for over half of imports. China is expected to increase its coking coal imports from the US, which have been slow to pick up this year due to the coronavirus.

After these reports Australian coal stocks suffered a sharp falls, Coronado Global Resources 8.9%, Whitehaven Coal 5.1%, Atrum Coal 5% and New Hope Corporation 4.6%.

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Posted By : Yogender Pancholi on Tue, 13 Oct 2020
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