Deep sea mining puts $560 billion in land extraction at risk — report
Even in optimal scenarios, the activity would generate only $6.25 million in tax revenue for countries involved, says Planet Tracker.
* Customs clearance typically takes 5-20 days
* Authorities notified traders about possible delays
* No reason cited for longer Australian clearing times
* Beijing-Canberra tensions have risen recently
* But BHP CEO says delays not tied to broader tensions (Adds BHP CEO comments)
Chinese coal traders have stopped ordering Australian coal as clearing times through China’s customs have doubled to at least 40 days, according to major buyers in China and international coal merchants, resulting in a sharp fall in Australian prices.
The traders and a broker said only cargoes from Australia, the biggest supplier of the fuel to the world’s top consumer, were affected.
I don’t believe for one moment this is linked to some of the higher level issues of relationships between China and the rest of the world
“We have stopped ordering coal from Australia because it is unknown how long the restriction will last,” said a manager at a Shanghai-based trading company who usually buys around 400,000 tonnes of Australian coal every month.
Customs clearance typically takes five to 20 days. Now it can be as much as 45 days, said the manager, asking not to be identified as he was not authorised to speak to the media.
The world’s biggest coking coal exporter, BHP Group , played down any suggestion the customs delays had any connection to recent Beijing-Canberra diplomatic tensions.
“I don’t believe for one moment this is linked to some of the higher level issues of relationships between China and the rest of the world,” BHP Chief Executive Andrew Mackenzie said, speaking during a post-earnings conference call.
He said the delays were not targeted against Australia, and reflected China’s effort to balance domestic production versus imports.
International traders confirmed the delays.
“Yes, the Chinese ports are holding up all thermal shipments ex Australia for 40-60 days…My clients are only buying spot Indonesian coal,” said an Australian coal trader, who asked not to be named due to company policy.
A coal broker at China’s state-backed mining group Minmetals said he had asked clients to put Australian imports on hold.
The delays have been a large contributor to slump in Australian coal prices.
Spot cargo prices for thermal coal exports from Australia’s Newcastle terminal have fallen by more than a quarter from their 2018 peaks, to below $90 per barrel amid ample supply and tepid demand, especially from China.
It was not clear why China had stepped up checks on Australian imports, but tension between Beijing and Canberra has grown in recent months over issues of cyber security and China’s influence in Pacific island nations.
China’s General Administration of Customs did not respond to a request for comment. There was no immediate response from the Foreign Ministry to a faxed request for comment.
Authorities at some ports notified importers verbally this month that Australian thermal coal, but also coking coal would take longer than usual to clear, the Shanghai-based manager said.
A Beijing-based coal trader and a purchasing manager at a coke plant received similar notifications. None of the buyers were aware of the reason.
China has curbed coal imports in the past to support domestic coal miners and reduce consumption to tackle air pollution. It restricted Indonesian coal imports in 2017, citing high impurities and low energy efficiency.
This time round, the restrictions seem targeted at Australia.
“Chinese demand for Indonesian coal remains strong,” said a merchant specialising in supply from the Southeast Asian country.
Reuters reported in January that dozens of ships carrying coal and iron ore, mostly from Australia, were waiting to unload outside ports due to possible customs delays.
The most-active thermal coal futures on China’s Zhengzhou Commodity Exchange hit 594 yuan ($87.79) a tonne on Monday, just shy of the three-month peak of 595.6 yuan, although the contract closed down 1 percent 583.8 yuan a tonne.
Traders in China and also on international markets said demand for Indonesian and also Russian coal was rising to make up for the shortfall in Australian supply.
Refinitiv ship tracking data showed coal shipments departing from Australia’s Newcastle port to China fell 30 percent last month compared with December to 18.19 million tonnes.
As of Monday, shipments scheduled to leave in February were 12.78 million tonnes. ($1 = 6.7663 Chinese yuan renminbi)
(By Muyu Xu, Meng Meng, Dominique Patton and Melanie Burton; Editing by Henning Gloystein and Kenneth Maxwell)
