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China plans to ban coal imports from Australia for political reasons

Mining industry / Ukraine / Australia / Asia

The PRC authorities issued an unspoken order banning the country's state-owned companies from buying coal from Australia, which could bring down the market.

China plans to ban coal imports from Australia for political reasons

Sources Fastmarkets reported on Monday 12 October that Chinese power plants and steel mills received demands from the authorities to stop imports of thermal and coking coal from Australia.

Utilities and steel mills were verbally notified during China's Golden Week (October 1-8) to immediately stop imports of Australian coal this year, sources said.

Major state-owned steel mills such as Anshan Iron & Steel and Benxi Iron & Steel in northeast China have received instructions to stop coal imports from Australia, sources said.

The execution of the order will lead to a collapse in demand for Australian coking coal, which will subsequently put downward pressure on global coal prices, especially for hard coking coal with low premium volatility.

In the medium volatility hard coking coal sector, prices are more resilient due to strong demand from India.

"At the moment, no steel mill will import Australian coking coal, so it is difficult to estimate prices right now," the journalists quote a Chinese trader.

The Premium Hard Coking Coal Index on October 9 was $ 141.15 per tonne, down $ 3.95 per tonne from $ 145.10 per tonne the day before.

Power plants have also been asked to stop imports of Australian thermal coal, an Australian buyer source said on Friday.

It is unclear why the Chinese authorities have taken this course of action, but Australia has been one of the strongest and earliest advocates for an independent investigation into the origins and early response to the coronavirus outbreak, a stance that has met with strong opposition from China.

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