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China blocks Oz coal imports to prop up local industry: report
CHINA has reportedly taken steps to reduce coal imports in a bid to give its domestic producers the upper hand. The move is expected to have a negative impact on Australian miners, which have benefited from significant supply cuts on the mainland over the past year.
The first sign of what is being described as an "unofficial" government policy came in recent days when the southern port of Guangzhou halted coal imports.
The port denied this in a statement after reports began circulating, but the Australian Financial Review has confirmed with analysts and traders that restrictions have been introduced.
Traders say the policy, which has not been officially announced to avoid being seen contravening Beijing's international trade obligations, is part of longer-term efforts to pressure local power stations to consume more domestic coal.
"And it's not just happening in Guangzhou but right up the coast . . . ports have been given unofficial import quotas," an analyst with a major trading house, who asked not to be named, was quoted as saying in a report by Melbourne's Financial Review.
The person said ports had been ordered to "slow the whole system down" to add extra costs to imported coal, after China's imports of steaming coal for use in power stations jumped 25 per cent during the first half of 2017.
The analysts' comments about slowing coal imports fit with those of a major Australian miner which said custom clearance times at Chinese ports had almost doubled, to 35 days, in the second half of this year.
"The industry is experiencing longer vessel queues, resulting in more demurrage costs," said a source from the miner, who requested not to be identified, in reference to additional costs from delays in unloading or loading a ship.
In addition to delays at major ports, China banned coal imports coming into 150 smaller second-tier ports from July 1. These are often located near to power stations and the move is estimated to have added US$1 per tonne in transport costs to imported coal, giving local suppliers and advantage.
The surge in imported coal over the first half of the year is being attributed to restrictions on the working days at local coal mines, an unusually hot summer in many parts of the country and weaker-than-expected production from hydroelectric power schemes.
The analyst said the government would like to see imports decline by 10 per cent over the second half of the year, which would support local coal prices but see a decrease in the prices for imported product.
China's previously embattled coal sector returned to profitability over the last year, as the government limited working days for mines and shut down illegal and low-grade production across the country.
An estimated 400 million tonnes of coal production has been taken out of the system in China, according to government figures.
The first sign of what is being described as an "unofficial" government policy came in recent days when the southern port of Guangzhou halted coal imports.
The port denied this in a statement after reports began circulating, but the Australian Financial Review has confirmed with analysts and traders that restrictions have been introduced.
Traders say the policy, which has not been officially announced to avoid being seen contravening Beijing's international trade obligations, is part of longer-term efforts to pressure local power stations to consume more domestic coal.
"And it's not just happening in Guangzhou but right up the coast . . . ports have been given unofficial import quotas," an analyst with a major trading house, who asked not to be named, was quoted as saying in a report by Melbourne's Financial Review.
The person said ports had been ordered to "slow the whole system down" to add extra costs to imported coal, after China's imports of steaming coal for use in power stations jumped 25 per cent during the first half of 2017.
The analysts' comments about slowing coal imports fit with those of a major Australian miner which said custom clearance times at Chinese ports had almost doubled, to 35 days, in the second half of this year.
"The industry is experiencing longer vessel queues, resulting in more demurrage costs," said a source from the miner, who requested not to be identified, in reference to additional costs from delays in unloading or loading a ship.
In addition to delays at major ports, China banned coal imports coming into 150 smaller second-tier ports from July 1. These are often located near to power stations and the move is estimated to have added US$1 per tonne in transport costs to imported coal, giving local suppliers and advantage.
The surge in imported coal over the first half of the year is being attributed to restrictions on the working days at local coal mines, an unusually hot summer in many parts of the country and weaker-than-expected production from hydroelectric power schemes.
The analyst said the government would like to see imports decline by 10 per cent over the second half of the year, which would support local coal prices but see a decrease in the prices for imported product.
China's previously embattled coal sector returned to profitability over the last year, as the government limited working days for mines and shut down illegal and low-grade production across the country.
An estimated 400 million tonnes of coal production has been taken out of the system in China, according to government figures.
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