China coal imports plunge 47pc in October
Strict import quotas raising fresh concern over the outlook for one of Australia’s biggest export earners.
China’s coal imports in October plunged by 47 per cent from a year earlier, reflecting strict import quotas and raising fresh concern over the outlook for one of Australia’s biggest export earners.
Imports fell to 13.7 million tonnes in October compared with 25.7 million tonnes a year earlier and 18.7 million tonnes in September this year.
Australian coal producers now face a wait until detailed China trade data is released later in November to ascertain whether it has been the subject of bigger cuts than its competitors amid broader trade tensions between Beijing and Canberra over a range of products spanning coal through wine and lobster.
Policymakers are reportedly targeting total coal imports of about 270 million tonnes in 2020, implying a 29 per cent fall in China’s coal imports is required in November and December, according to Commonwealth Bank analysis.
It remains too early to make a call on whether Australia is being singled out for punishment.
“For China to achieve its coal import target, China’s coal imports need to contract 38 per cent year on year in the fourth quarter of 2020,” CBA analyst Vivek Dhar said. “We would need to see China’s coal imports from Australia contract more steeply than 38 per cent a year to meaningfully conclude that Australian coal is being targeted.”
Coal import restrictions were last floated by Chinese authorities in May, as China looked to support its domestic mining sector amid tumbling global prices.
While the fall in imports may simply result in China’s ports closing on existing import caps after a buying spree when Australian coal was cheap earlier this year, tensions remain high amid a broader crackdown.
Senior Morrison government officials on Thursday advised China-exposed businesses to “find other markets” during a crisis phone hook-up ahead of a threatened ban on exports worth $6bn a year.
Australian companies that last year exported $149bn of goods to China have been rattled by last week’s reports of a ban on Australian wine, lobster, copper, sugar, timber and coal entering China after Friday.
Labor foreign ministry spokeswoman Penny Wong said the government’s “go it alone” advice to exporters was not helpful. “We can’t just leave our exporters to go it alone, and the government really needs to ensure that it advocates and supports our export sectors,” she said.
Despite the trade drama, new customs figures from Beijing show Australia has exported more than $131bn to China, the second highest amount on record.
Total exports were 4.7 per cent lower than the first 10 months of 2019, the year surging iron ore demand saw Australia export a record $149bn of goods.
But the figures released over the weekend show that with two months of the year still to be tallied, Australia has already exported $13bn more than in 2018, the third highest year on record.
China has restricted coal imports back to 2017 levels with Australian producers forced to sell distressed shipments to other countries, consultancy Wood Mackenzie said in October.
“We have feedback from producers that there is very little if any buying activity from China since mid-October when the recent restrictions were implemented. It seems that Chinese buyers are assuming that the bans will extend at least into the first quarter of 2021,” WoodMac analyst Rory Simington said.
