Australian coal flotilla stuck off the Chinese coast tops 80 ships
The Australian coal flotilla stuck off the Chinese coast has swollen to more than 80 ships carrying blacklisted cargo worth $1.1bn.
The Australian coal flotilla stuck off the Chinese coast has swollen to more than 80 ships carrying blacklisted cargo worth more than $1.1bn, prompting the Morrison government to raise concerns about “discriminatory action”.
The Australian can also reveal coal exports to China have plunged by 96 per cent in the first three weeks of November, as a go-slow by Chinese officials crunches the nation’s second biggest export industry.
Trade Minister Simon Birmingham said reports of the growing delays had raised the government’s concerns about the trade practices China was deploying. “We are working closely with the industry as well as seeking assurances and clarity from Chinese authorities that this is not discriminatory action against Australian coal,” he said.
“We reiterate that all terms of our free-trade agreement and world trade obligations between Australia and China should be upheld and respected.”
The widening coal halt comes at a difficult time for the Morrison government, which is attempting to reduce tensions with its biggest trading partner after a seven-month spat.
Coal was the biggest export industry on a list of seven Australian products Chinese state media reported were banned in early November. There are now 82 coal vessels carrying 8.8 million tonnes of coal worth an estimated $1.1bn stuck off China, four times the number of ships known to be stranded just two weeks ago, according to industry sources. Up to 1500 seafarers are stranded on the vessels.
Australian shipments of coal have plummeted to a single shipment of 190,000 tonnes in the first three weeks of November compared with up to 5 million tonnes expected this month, sources said.
Fears are mounting over a big earnings hit and job losses at coking coal producers as prices remain at rock bottom levels of just $US100 a tonne, down from $US200 in 2019 and $US300 two years earlier.
Consultancy Wood Mackenzie said: “If the limit on Australian imports persists, we may see greater disruption to normal buying patterns. Australian coals will be forced into markets in Europe and South America, resulting in lower prices in those markets.”
Australian producers have been forced to send shipments to far-flung destinations in response to one of their biggest customers shunning supplies from Queensland and NSW mines.
Eight shipments of discounted coal were sold to Turkey in the past two weeks, sparking concern among miners that China’s ban had eliminated the premium attached to Australian supplies.
Opposition trade spokeswoman Madeleine King said “billions of dollars in trade and thousands of Australian jobs” were at risk from China’s trade retaliation.
“The government has no idea what to do next,” Ms King said. “It’s hard-working Australians who are paying the price.”
Australia’s rivals are cashing in. Coal from North America is now being sold into China at a huge mark-up to Australian supplies, the first time American coal has fetched a premium in the market.
China’s Foreign Ministry this week indicated the hold-up of ships at the northern Chinese ports of Jingtang and Caofeidian were linked to environmental checks.
Senator Birmingham said Australian coal should pass “any credible testing regime”. He said Australian coal exporters in most cases had already been paid and the delays were also occurring to foreign vessels and crews.
“These countries have also made representations to Chinese authorities,” he said.
Australia’s biggest miner has been caught up in the go-slow. BHP chief commercial officer Vandita Pant recently met analysts amid speculation China might look to buy more coal from North America and Mongolia at the expense of Australia.
UBS analyst Glyn Lawcock said: “It remains unclear whether BHP is currently loading ships to China and the situation appears likely to continue into 2021. To shift away from Australian coal, China may look to import a higher proportion of North American and Mongolian coal, which could see global trade flows adjust.”
Analysts at Morgan Stanley said the slowdown could be related to Chinese quotas but noted “the situation for next year remains uncertain”.
One of the ships is an Indian-flagged vessel packed with Australian coal, which has been prevented from leaving Chinese waters, even after Japan offered to accept its cargo to end the more than five-month standoff.
Victorian timber was added earlier in November to a list of industries banned by China, which includes wine, barley, beef, wheat, lobsters, cotton. Sugar and copper are cited by state media as the next targets in the extraordinary campaign by Australia’s biggest customer.
