Australia Concerns Over Reported China Coal Import Ban

Australia Concerns Over Reported China Coal Import Ban

Sino-Australian relations worsened after Prime Minister Scott Morrison called for an investigation into how the coronavirus pandemic began in Wuhan a year ago.

"We think it's another concerted effort by authorities to support the domestic market", Australia and New Zealand Banking Group analyst Daniel Hynes said in a report.

Australia investigates reports that China has verbally instructed buyers to avoid Australian supplies.

Relations between China and Australia nosedived when Morrison called for an independent inquiry into the origin of the coronavirus in April.

China's voracious appetite for iron ore continued in September, even though Australian exports fell for the month.

Birmingham expressed hope that the coal issue would resolve itself. Nevertheless, this will weigh on prices of premium hard coking coal.

Earlier this year, Beijing effectively banned imports of Australian barley, placed restrictions on meat, and discouraged students and others from traveling to Australia.

Beijing has objected to a series of diplomatic moves by Canberra that it viewed as supporting the its trade and security dispute with China.

China is by far Australia's top overall export market, worth $104 billion in 2019 according to the International Monetary Fund, so a lasting severing of trade ties could damage the Australian economy.

The Asian nation is also the No. 2 destination for Australia's thermal coal exports, behind Japan.

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The measures have proved effective, with domestic prices since trending higher and now approaching record premiums to global coal benchmarks.

Inventory of coking coal at major Chinese ports hit an 18-month low of 3.5 million tonnes as of Oct 9, according to data compiled by Mysteel consultancy.

China produces less of it and the country's steel-making giants are still dependent on overseas suppliers such as Australia, which typically accounts for over half of imports.

Newcastle benchmark thermal coal prices fell by the most in nearly four years on Monday as reports of the ban filtered through the market.

Commodities analysts believe that the informal approach was politically motivated though it also aligned with tightening coal import quotas and Beijing's goal to reduce consumption and carbon emissions.

"But we take the reports seriously enough to try and seek some assurances from Chinese authorities".

"Australia will continue to see demand for its high quality of coal and the medium term outlook remains positive".

Beijing 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.

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