BEIJING (Reuters) – Customs in the northern port of Dalian in China have banned imports of Australian coal and will cover global coal imports from all sources until the end of 2019 to 12 million tonnes, an official told Reuters of the Dalian Port Group.
PHOTO FILE: A reclaimer places coal in stocks in the coal port of Newcastle, Australia, on June 6, 2012. REUTERS / Daniel Munoz / File Photo
The undetermined prohibition on imports from the main Australian supplier, active from the beginning of February, occurs when the main ports in other parts of China extend the time of compensation of the Australian coal to at least 40 days.
Coal is Australia's biggest recipient of exports and the Australian dollar fell in news, dropping by more than 1% to $ 0.7086.
Five ports guarded by the customs of Dalian – Dalian, Bayuquan, Panjin, Dandong and Beiliang – will not allow Australian coal to pass through customs, the official said. Coal imports from Russia and Indonesia will not be affected.
"I am aware of unconfirmed and unpublished press reports and have asked our ambassador in Beijing to urgently clarify their truthfulness," said Australian Trade Minister Simon Birmingham.
"We continue to work closely with the industry on issues related to market access … China is an esteemed partner of Australia and we trust our mutual free trade commitments will continue to be honored" .
Birmingham also said that Australian coal exports to China in the fourth quarter of 2018 were higher in volume and value than in the same period of 2017.
The ports of Dalian have enlivened around 14 million tons of coal last year, half of which came from Australia, said Gu Meng, an analyst at Orient Futures.
The Dalian official refused to be named due to the delicacy of the matter. Neither the Dalian customs nor the National Customs Administration responded immediately to a request for comment.
The Dalian official said he was not given a reason for banning Australian imports.
However, it follows the latent tensions between Beijing and Canberra on issues such as cybersecurity and China's influence on island nations in the Pacific Ocean. Australia has recently revoked the visa of an important Chinese business man who has further tended the ties.
Asked if the ban was linked to bilateral tensions, Geng Shuang, a spokesman for the Chinese Foreign Ministry, told reporters that customs are inspecting and testing coal imports for safety and quality.
"The objectives are to better safeguard the legal rights and interests of Chinese importers and to protect the environment," he said, adding that the move was "completely normal".
Australia & # 39; s New Hope Coal declined to comment. Yancoal said he will not be affected by Dalian's ban as it is not shipped to the port. Glencore addressed the requests to the Council of Minerals of Australia, who refused to comment.
Beijing has tried to limit coal imports in general to support domestic prices.
A coal trader based in Beijing said Dalian released about 6 million tons of coal in January, which had been postponed by the end of 2018 when China slowed customs clearance to curb imports.
Late loads would not be included in the 12 million tonnes of the 2019 quota, he added, citing customs information.
Dalian manages both carbon and coke coal imports, but it is expected that clamp down will have a greater impact on coking coal, used in steel production, than thermal coal used to generate electricity.
Australian coking coal spot in the Chinese port of North Jingtang is 200 yuan ($ 29.85) cheaper per tonne than domestic prices, according to data tracked by Orient Futures. The price difference for thermal coal is about the same.
"It is difficult to find a substitute for Australian coke coal as its sulfur content is very low," said a purchasing manager in a large plant in Hebei province that produces coke, used in the iron and steel process, from coal from coke.
"The current inventory in ports should be sufficient to support use for one or two months, but it could be a long-term problem, especially if other ports also tighten imports," he added.
He refused to be named due to company policy.
The most active coking coal contract for delivery in May rose by more than 2 percent during Thursday morning trade.
"(The restriction) will further reduce profit margins in steel mills after the Vale accident has already pushed up prices for iron ore," Gu told Futures.
China bought 28.26 million tons of coking coal from Australia in 2018, accounting for 43.5% of the country's total fuel imports, showed customs data.
Reporting by Meng Meng, Muyu Xu and Dominique Patton; Additional reports by Michael Martina in BEIJING, Tom Westbrook in SYDNEY and Melanie Burton in MELBOURNE; editing by Richard Pullin and Christian Schmollinger