China customs testing Australian coal imports, reports of ban

Roman Schwartz
February 23, 2019

China has responded to reports of an indefinite ban on Australian coal imports by mocking concerns over the decision and saying it's "normal practice".

"I want to provide reassurance that we have no basis to believe that there is a ban on Australian coal exports into China or into any part of China", he said.

"The reported ban would impact a relatively small proportion of Australia's coal exports - imports through Dalian comprise only 1.8 per cent of Australia's total coal exports - but if the reported ban reflects a more significant deterioration in the trade relationship between Australia and China then it could have more important impacts", he said.

The Australian sharemarket shrugged off China's surprise Aussie-coal ban and another round of weak global manufacturing data as yield hunting drove buying and the Reserve Bank stuck to its growth outlook.

"We believe and understand that these are simple import quotas, consistent with the likes that China has applied before, that China continues to apply and that apply equally to all countries", he said. They've singled out only Australian coal.

Blocking "a couple of months of coal exports" would not hurt the Australian economy, said Philip Lowe.

Industry sources say similar delays are now occurring at other Chinese ports handling both coking and thermal coal.

The Dalian ports handled about 14 million tonnes of coal previous year, half of which was from Australia, said Gu Meng, an analyst at Orient Futures.

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Australia's ties with China have deteriorated since 2017, when Canberra accused China of meddling in its domestic affairs.

Coal is now Australia's most valuable export generating $64 billion worth of income, with China consuming around a quarter of the total shipments.

A Beijing-based coal trader said Dalian had cleared about 6 million tonnes of coal in January that had been delayed since late 2018 as China slowed customs clearance to curb imports.

Investors eyed signs of progress in the latest round of trade negotiations between the U.S. and China amid expectations President Donald Trump will meet Chinese President Xi Jinping next month to strike a deal.

Markets are spooked that it could be the start of more widespread import curbs against Australia, which counts China as its biggest trading partner.

He further added that, recently, there are certain environmental problems surrounding the coal imports. Coal imports from Russian Federation and Indonesia will not be affected. "They've come in largely in expectation with what the market was thinking".

ANZ strategists said Chinese coal restrictions weren't new. "We have to wait to see what the underlying reasons are", he said at a parliamentary hearing in Sydney.

According to official data, the country added 39.1K new jobs in January, largely surpassing the 15.0K expected, while the unemployment rate remained steady at 5%, despite the participation rate rose to 65.7%.

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