Chinese port bans imports of Australian coal and drops the dollar | Business

One of China's largest ports has banned imports of Australian coal and will limit aggregate imports of coal by 2019 to 12 million tons by its ports, said an official from the Dalian Ports Group.

The unlimited ban on imports from Australia, China's largest coal supplier, comes as major ports in other parts of China extend Australian coal offsets by at least 40 days, Reuters reported.

Coal is Australia's main export source and the Australian dollar has fallen more than 1% to 70.86 USD on the news.

Five ports guarded by Dalian Customs – Dalian, Bayuquan, Panjin, Dandong and Beiliang – will not allow Australian coal to clear customs, the official told Reuters.

Coal imports from Russia and Indonesia will not be affected.

The ports handled about 14 million tonnes of coal last year, half of which came from Australia, said Gu Meng, an badyst at Orient Futures.

The head of Dalian refused to be named because of the sensitivity of the issue. Neither Dalian Customs nor China's General Customs Administration would respond to a request for comment.

The manager was not informed of the reason for the ban, he said.

However, it is part of a context of latent tensions between Beijing and Canberra on issues such as cybersecurity and China's influence in the Pacific island countries. Australia has recently revoked the visa of a prominent Chinese businessman to tighten ties.
Beijing has also tried to restrict coal imports more generally in order to support domestic prices.

Australian coking coal in China's northern Jingtang port costs 200 yuan (29.85 US dollars) less per ton than domestic prices, according to data collected by Orient Futures. Thermal coal prices are approximately the same.

Dalian manages both imports of thermal coal and coking coal, but the crackdown is expected to have a greater impact on coking coal, used in the manufacture of steel, than thermal coal, used to produce electricity.

"It is difficult to find an Australian coking coal substitute because its sulfur content is very low," said a purchasing officer at a large coke plant in Hebei Province.

"Current stocks in ports should be sufficient to support use for one or two months, but this could be a problem in the long run, especially if other ports also reduce imports," he said. added.

The most active coking coal contract for the May delivery rose more than 2% during morning trading on Thursday.

"(The restriction) will further reduce steel plant profit margins after the Vale accident has already driven up iron ore prices," Gu told Orient Futures.

China bought 28.26 million tons of coking coal from Australia in 2018, accounting for 43.5 percent of its total fuel imports, customs data showed.