Australian producers are already offering cut-price coal to India
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The consequences of China’s ban on Australian coal imports are already being felt across the industry despite the thin details released.
One market observer told Stockhead that Aussie coal is already being sold at a discount to China’s competitors.
“As you can imagine China’s apparent decision to curb imports of Australian coal into its northern ports has caused significant angst in the market,” Mike Cooper, a senior editor covering the coal market for S&P Global Platts, said.
“Offer prices for Australian thermal coal have slumped as a result and we heard yesterday a large Australian coal producer offering an April loading cargo of Newcastle 5,500 NAR thermal coal – the grade that goes to China – to India at $55/mt [metric tonne] FOB Newcastle.
“Spot market prices for this grade were trading at $60/mt FOB Newcastle at the start of the week.”
News was widespread on Friday that North China’s largest port, the Port of Dalian, had banned Australian coal imports indefinitely and placed a 12 million tonne cap on all other international imports.
Chinese sources apparently revealed to S&P Global Platts as early as Wednesday this week that a meeting of Chinese port officials, held that day near Dalian port, decided that only cargoes from Indonesia and Russia would be allowed into five northern ports.
S&P Global Platts reported that some Chinese companies with stakes in Australian mines were speculating that the ban would only last about two to three months.
There has been speculation that the ban was incited by strained Australia-China tensions after the Australian government decided not to allow tech company Huawei to participate in the 5G network.
But Treasurer Josh Frydenberg poured cold water on suggestions it is a retaliation.
China has reportedly responded to news of the ban, with the ABC reporting today that the Asian behemoth was stopping Australian coal imports to “protect the interests of Chinese importers and the environment”.
“China’s customs assesses the safety and quality of imported coal, analyses possible risks, and conducts corresponding examination and inspection compliant with laws and regulations,” Foreign Ministry spokesman Geng Shuang told the ABC.
Mr Cooper says the key two questions for the Australian coal industry are: how long are these restrictions likely to last, and why have they been imposed?
“At the moment, nobody except Beijing really knows,” he said.