What Ban? Australia Coal in China Crosshairs Rallies Instead

(Bloomberg) -- Australia’s coking coal exports this week were reportedly being cut off from China, one of its largest buyers.

The market rallied instead.

Spot premium hard coking coal shipped from Australia gained 3.8 percent on Thursday to $215.09 a ton, the highest since Jan. 2, according to Fastmarkets MB. That followed a Reuters report that the port of Dalian had banned Australian imports. It was also the day after the market was hit by a supply outage by Anglo American Plc shutting its biggest producing mine in Queensland.

“If there was some ban on Australian coking coal then you would see it reflected in the spot markets very quickly and that’s not the case,” Daniel Hynes, an analyst at Australia & New Zealand Banking Group Ltd., said by phone. “Premium hard coking coal actually went up. Our chats with clients as well as our people on the ground suggest coal is still getting through.”

China’s foreign ministry on Friday said the report that it banned imports was false. Ports in China are all receiving import declarations for coal including those from Australia, ministry spokesman Geng Shuang said at a regular news briefing in Beijing.

Bloomberg separately reported that while Chinese officials are holding up imports of Australian coal, with at least one major port suspending customs clearance, they have so far stopped short of an official ban.

Political Tensions

China has delayed customs clearance of Australian coal imports for as long as 40 days, with the timing of the measure raising speculation that the exporter is being targeted at a time of strained relations between the two nations.

China is a major customer of Australian coal, purchasing more than 20 percent of the nation’s exports last year. While the thermal variety used in power stations would be implicated in the clampdown, coking coal would be hit worse, according to Morgan Stanley.

Coal still appears to be getting through. Anglo’s Chief Executive Officer Mark Cutifani said Thursday that the major Australian coking coal producer isn’t seeing problems with its shipments into China. On Friday, before the Chinese dismissal of the ban, Australian Treasurer Josh Frydenberg had denied reports that Dalian halted its imports.

“Nothing has drastically changed from what we can see,” Hynes said, adding there have been delays in getting imported coal in China for a while now. “The spot market seems to reflect that. It’s all a bit of a storm in a teacup.”

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