China customs holds up $1bn worth of Australian thermal coal
Australian thermal coal worth more than $1bn is being delayed by Chinese customs amid suspicions of political payback.
Some 15 million tonnes of Australian thermal coal worth more than $1 billion is waiting to clear customs in China, according to industry analyst Platts, with no sign of an easing in processing delays imposed since February.
“Thermal coal market participants say they are yet to see any changes to Beijing’s import policy for seaborne traded coal, including Australian origin, which has endured long holdups at Chinese ports for the past several months,” Platts’ Asian thermal coal editor, Michael Cooper, told The Australian.
Mr Cooper said the amount of Australian coal being held up in customs in ports in China was now the equivalent of 100 Capesize bulk carrier cargoes of 150,000 tonnes each. Currently thermal coal from Newcastle is trading at around $US75 a tonne.
Australian coal has been subject to lengthy processing delays of up to 50 days from around February this year.
While China’s Ministry of Foreign Affairs has said the coal is subject to environmental testing, it is widely believed the processing delays are part of a low-key strategy to send a message to Australia that China is unhappy with some of its policies, including last year’s decision to ban Chinese telecommunications giant Huawei from supplying equipment for the next generation 5G network.
Australian coal is cleaner than Chinese domestic coal and coal imported from other sources, including Indonesia and Mongolia.
Coal market players had been hoping the processing delays for Australian coal in China may have eased after the May federal election but the latest figures from Platts show the situation continues to be a problem.
China is also unhappy that Prime Minister Scott Morrison also chose as his first official trip after the election a visit the Solomon Islands, which is weighing up whether to shift its political allegiance from Taiwan to China.
China also moved last December to instigate an anti- dumping investigation into imports of Australian barley. The investigation is continuing.
The unofficial delays in processing Australian coal come at a time when China is closely watching total coal imports, with the economy slowing and the government also pushing utilities to move to gas-fired power rather than coal for environmental reasons.
Platts has also been told that China could look at imposing stricter controls on all imported coal in the last quarter of the year, with total imports looking like running ahead of the unofficial annual quota.
China did this last November in a bid to cap total coal imports at 2017 levels of around 271 million tonnes.
China imported a total of 281 million tonnes of thermal and metallurgical coal last year, an increase of more than three per cent over the previous year, despite strict import controls in December.
Platts said a trader in north China had reported that his state-owned company was “wary of importing Australian and Colombian cargoes in case import curbs were further tightened”.
Platts said there were reports that coal stocks were “overflowing” at Chinese utilities and a port in southeast China near to end users (of coal) was “running out of space for discharging cargoes”.
It said coal stocks at major ports in northern China had risen by a million tonnes over the month to around 21.6 million tonnes.
Mr Cooper said South Korea was now buying more Australian thermal coal on the spot market.
“In China’s absence, South Korea has slipped into the spot market by issuing tenders for Australian thermal coal, which, in some cases, are for strings of shipments out to 2021,” he said.