New Australian coal orders are being suspended after China ordered a freeze on further imports.
Major buyers in China and international coal merchants in China believe the freeze is due to average clearing times through customs doubling to 40 days. There have also been diplomatic tensions between Canberra and Beijing over issues of cyber security and China’s influence in Pacific island nations.
Australian commodity prices have taken a sharp fall on the domestic stock market, with spot cargo prices for thermal coal exports via Newcastle terminal falling by more than 25 per cent to under $90 a barrel.
Traders and brokers say the only cargo affected is from Australia, which is arguably the biggest supplier of the fuel to China.
“We have stopped ordering coal from Australia because it is unknown how long the restriction will last,” a Shanghai-based trading company manager told Reuters, saying they usually buy about 400,000 tonnes of Australian coal a month.
However, major coking coal exporter BHP Group denied the freeze has anything to do with politics. He believes delays are not targeted against Australia but reflected China’s effort to balance domestic production versus imports.
“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 at a media conference call.
However, international traders tell a different story.
“Chinese ports are holding up all thermal shipments ex-Australia for 40-60 days,” an Australian coal trader told Reuters. “My clients are only buying spot Indonesian coal.”
A coal broker at China-backed mining group Minmetals also admitted he had asked clients to postpone Australian imports.
China’s General Administration of Customs did not respond to a request for comment. There was also no immediate response from the country’s Foreign Ministry.
Coal shipments from Newcastle port to China dwindled 30 per cent in January to 18.19 million tonnes compared to the previous month according to Refinitiv ship tracking data. More than 12 million tonnes of shipments are scheduled to leave in February.