Australian coal, timber trade with China resumes amid improved ties: insiders
Published: Mar 21, 2023 10:04 PM
Tons of thermal coal are unloaded and transported at a port in Lianyungang, East China's Jiangsu Province on December 21, 2022. Photo: VCG

Tons of thermal coal are unloaded and transported at a port in Lianyungang, East China's Jiangsu Province on December 21, 2022. Photo: VCG

Australian coal trade with China is set for a full recovery with exports in February amounting to 207,236 tons, data from China's General Administration of Customs (GAC) showed. The shipments appear to have been the first in two and a half years. 

More coal shipments are expected to come in March, according to industry insiders, a sign of buyers' rising confidence in Australian goods amid improved relations.

Imports of other goods, such as timber, which was suspended for quality hazards, also resumed last month, the Global Times learned.

GAC figures showed that China imported 72,982 tons of coking coal and 134,254 tons of other coal from Australia in February, while there were no imports in January.

The trade resumption was the result of restored business confidence as well as changing market demand, industry insiders said. Price factors also played a part.

Sealand Securities stated on Monday that in the short term, the offshore price of Australian thermal coal of 5,500 kcal was about $120 per ton, which is close to 1,100 yuan per ton in China - or about 100 yuan below the domestic price.

"It is expected that coal imports from Australia would rise to about 2 million tons in March, mainly coking coal, driven by demand and price," an industry insider told the Global Times on Tuesday on condition of anonymity.

But as transportation and clearance take time just like any type of trade, the import volume may be reflected only in April, the person said.

Some media reports said that four companies, including China Baowu Group, were among the first to resume Australian coal imports. But the insider said that orders from more companies are coming into the market.

Until 2021, Australia had long been China's second-largest source of imported coal. But the situation changed, as many Chinese importers including steel companies chose to diversify their suppliers to cope with disruptions posed by soured relations between the two nations, ignited by the previous Morrison government's hostile policy against China.

Some other goods such as timber have also seen a recovery. In January, China imported some 502 tons of timber-related products with another 449 tons in February, taking the two-month total to nearly 1,000 tons.

A person with a domestic timber industry association told the Global Times that the timber trade is recovering. "It may take more time for a full rebound, since there are many options for domestic consumers other than Australia," she said. 

GAC statistics indicate that there has been an improvement in other areas of trade as well.

Other products such as lobsters and wine exports to China have also seen a gradual recovery. But some foreign media claimed that Chinese "trade curbs" stood in the way of Australian coal imports.

China's Ministry of Commerce (MOFCOM) said on March 16 that such misleading claims are inappropriate and China's automatic permit management system for coal imports is functioning normally. 

"China manages foreign trade in accordance with WTO rules and Chinese laws and regulations, and it is inappropriate to misinterpret the relevant management methods as restrictive measures," Shu Jueting, a spokesperson for the MOFCOM, said at a press conference.

China uses an automatic licensing management system for coal imports, and automatic permits for coal imports can be applied for normally, Shu said.

Chen Hong, president of the Chinese Association of Australian Studies and director of the Australian Studies Centre at East China Normal University, told the Global Times on Tuesday that the trade recovery shows buyers' restored confidence in Australian goods amid an improvement in bilateral relations.

The two sides must stand firm and exclude external distractions including from the US while striving to maximize the common and mutual interest for the full recovery of the consumers' confidence and trade flows, Chen said.