Australia coal exports ‘to suffer’ amid China’s supply glut
Published: Oct 13, 2020 06:58 PM

A machine unloads coal imports at a port in Lianyungang, East China's Jiangsu Province. File photo: CFP

Australia's coal exports are set to suffer this year, as Chinese coal importers are expected to suspend purchasing from Canberra, citing a domestic supply glut and Chinese government's environmental protection push.

Some foreign media reports have interpreted a reported "coal import ban" as China's "political revenge" amid souring ties between Beijing and Canberra. Although Chinese authorities have not offered a clear answer when asked about this issue, experts noted that the deteriorating bilateral relationship is set to lead trade relations to a dead-end that Australia can hardly bear.

The comments come as a Bloomberg report said that China's customs authorities have told several Chinese state-owned steelmakers and power plants to stop importing Australian coal, citing people familiar with the order.

In response to the reported "ban", Chinese customs said on Tuesday at a press conference in Beijing that it will further strengthen the supervision of imports of related products, and it asked reporters to "consult the relevant authorities for further information."

According to a Reuters report, Australia is investigating media reports that China has stopped taking its coal shipments, Prime Minister Scott Morrison said on Tuesday, adding that such import quotas to support China's market were "not uncommon".

"China's domestic demand for coal dropped greatly due to the COVID-19 pandemic in the first half, resulting in an oversupply at home. Thus, a drop in imports is in line with the national energy situation," Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, told the Global Times on Tuesday.

Although demand has recovered as the pandemic was brought under control in China, Lin believes that there will still be a drop of 2-3 percent in coal imports this year.

According to customs data released on Tuesday, China imported 239 million tons of coal in the first three quarters of the year, a decrease of 4.4 percent year-on-year.

A veteran industry insider told the Global Times on Tuesday that Chinese importers may also be subject to purchase restrictions, in line with the country's increasing efforts to curb carbon emissions and protect the environment. 

Lin added that China's reliance on overseas coal is rather low, and any suspension of coal imports from Australia will not affect China's coal supply. However, any such suspension will deal a "heavy blow" to the industry in Australia.

The Minerals Council of Australia said it was aware of the reports but played down any extended impact, insisting that the outlook for Australian coal "remains positive" in the medium term, according to media reports.

Citing a person familiar with the matter, Bloomberg reported that Chinese ports have been told not to offload Australian coal.

Nevertheless, an insider close to the Port of Dalian in Northeast China's Liaoning Province, which is China's 10th-largest port, told the Global Times on Tuesday that it had not received any official notice to halt coal imports from Australia as of Tuesday.

A source at Lianyungang Port in East China's Jiangsu Province told the Global Times on Tuesday that the port is now offloading Australian coal as usual.

The coal "ban" reports come amid deteriorating bilateral ties between China and Australia, as the latter has been blindly facilitating the Trump administration's anti-China policies. 

Bilateral trade in the first three quarters shrank 1.1 percent year-on-year, with Chinese imports of Australian products in particular down 5.1 percent, Li Kuiwen, spokesperson of Chinese customs, said on Tuesday.

The person close to the Dalian port said that frozen beef imports from Australia have also dropped sharply in recent weeks, although China's overall beef imports surged by 38.8 percent in the first three quarters this year. 

Zhao Lijian, spokesperson of China's Foreign Ministry, said at a press conference on Tuesday that China had noted the report, adding that a stable China-Australia relationship is in the common interests of both countries, but it requires joint efforts.

"We hope Australia will meet China halfway, and do more things that are conducive to mutual trust and cooperation," Zhao said.