Canberra is investigating reports Beijing ordered its state-owned enterprises to stop buying Australian coal, stoking fears that trade tensions between the countries were rising.
But analysts cautioned that the unconfirmed reports of a coal ban may reflect efforts by China to prop up its own domestic coal industry rather than a deepening political dispute with Australia.
Beijing has reportedly issued a verbal communication to state-owned energy companies and steel mills to immediately stop importing Australian coal — a potentially crushing blow to the country’s A$55bn ($39bn) a year coal export industry.
China has already imposed sanctions on barley, beef and wine imports following a sharp deterioration in diplomatic relations linked to Canberra’s call for an inquiry into the origins of the Covid-19 pandemic in Wuhan.
Simon Birmingham, Australia’s trade minister, said the government had received no official notification from Beijing regarding an order to stop buying Australian coal.
“We don’t have any evidence to verify those reports,” he told Australian radio on Tuesday.
“I have seen the reports and we have certainly been in touch with the Australian industry and we have also been working to seek a response from Chinese authorities in relation to the accusations that have been made publicly.”
News of a proposed coal ban was first reported by S&P Global Platts and Argus Media, with the latter stating that one state-owned Chinese utility had temporarily halted a shipment of Australian coal.
But some analysts suggested the action may be unlinked to simmering diplomatic tensions.
“It is possible the term ‘ban’ is being confused with ‘quota’ and Australia producers have already reached their import quotas for the year,” said Peter O’Connor, analyst at Shaw and Partners, a Sydney-based broker.
He said coal importers from several nations had experienced similar import restrictions around October in previous years, once they had reached import quota limits designed to protect China’s coal sector.
Daniel Hynes, an analyst at ANZ, said it appeared some Chinese buyers received the order but others had not. He added that the action did not appear to be directed exclusively at Australia, with other import sources also coming under the directive.
Robert Rennie, head of global market strategy at Westpac, said import quotas, which China uses to control prices and the role of the commodity in the country’s energy mix, combined with “huge queues” off ports in China, meant imports would have to slow over the remainder of the year.
“Australian exports have risen much more than others, so given the ongoing politics in the background, [it’s] easy to penalise Australia versus other trading partners,” he said.
Coal producers have been concerned political tensions with China were effecting the trade for months.
“Vessels are waiting outside in China to be discharged, and definitely, Australia is not front of the queue,” Ivan Glasenberg, chief executive of Glencore, the miner and commodities trader, told analysts in August. “Yeah, that is affecting the coal business.”
Source: Economy - ft.com
