China port bans Australian coal imports

Marco Green
February 22, 2019

Frydenberg cautioned against "jumping to conclusions", after Reuters said Dalian Port Group has imposed an indefinite ban on Australian coal and will cap overall coal imports for 2019 through its harbors at 12 million tonnes.

A Chinese media steel industry website says that China will obtain most of its coal imports in 2019 from Russian Federation and Indonesia, reports Sydney Morning Herald. Coal imports from Russian Federation and Indonesia will not be affected.

"If you look at the volume and the value of our coal exports to China and in the last quarter of 2018, it was higher in the same period previous year and the coal exports underpin more than 50,000 jobs and $60bn of exports, so they will continue to be strong and robust".

DFAT official Graham Fletcher said Beijing was yet to confirm a Chinese port's ban on Australian coal imports.

He added a few words on China-Australia relations.

China bought 28.26 million tonnes of coking coal from Australia in 2018, accounting for 43.5 percent of the country's total imports of the fuel, customs data showed.

CBA commodities analyst Vivek Dhar said the ban as it stands affects only a small percentage of Australia's coal exports, but the fear is the action will spread quickly.

Australian Trade Minister, Simon Birmingham, has called the reports "unconfirmed and unsourced", and says the Australian Ambassador to Beijing is inquiring with authorities about the decision to clarify the veracity of the reports.

"We continue to engage closely with industry on matters of market access..."

Australian coal manufacturers are increasingly concerned over the current situation and the uncertainty of when the restrictions would be removed, according to Tania Constable, chief executive of the Minerals Council of Australia. "They have commitments as a World Trade Organisation member and we are an important trading partner to each other and we want this relationship to be smooth and ongoing", he said.

Reportedly, ships importing coal into China in recent weeks have faced uncommonly long delays in dealings with Chinese port customs.

CBA's Vivek Dhar said any displaced Australian coal shipments would eventually find a market, but at a discounted price. "One has to interpret it has having to do with the icy political relationship between Australia and China".

The Australian dollar fell more than one per cent this afternoon following news China's Dalian region customs had banned Australian coal imports with effect from this month.

In the currency market, the offshore Chinese yuan firmed to its strongest level since July past year on hopes of further progress in the Sino-U.S. trade talks, and was last trading at 6.7076 per dollar. Australia recently revoked the visa of a prominent Chinese businessman further straining ties.

However, currency markets are likely to remain on edge for some time.

Asian shares pulled ahead to fresh 4-1/2-month highs and USA equity futures rose on a Reuters report that the United States and China have started to tackle the stickiest issues in their trade war.

Other reports by Click Lancashire

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