Australia's Chinese coal exports pivot to India: Update

Updates throughout, adds charts

Australian thermal coal exports to China slumped to a near decade low in November while shipments to India reached a record high, as Beijing's informal import ban drove a shift in trade flows.

Australia exported 14.43mn t of thermal coal in November, down from a revised 17.24mn t in October and from 15.72mn t in November 2019, Australian Bureau of Statistics (ABS) data show.

Customs data for December will not be available for another month, but Argus estimates that thermal coal exports recovered to around 19.6mn t last month, based on shipping data. This would be a 2020 high, although still down from 20.9mn t in December 2019, and bring annual exports to 200.9mn t. Australia shipped 212.2mn t in 2019.

Shipments to China fell to 530,000t in November, which was the lowest since March 2011, when high-grade thermal coal prices were around $125/t fob Newcastle, and just 10pc of the 5.3mn t shipped to China from Australia in June 2019, when the price was around $70/t.

China stayed out of the Australian export market in December, with no shipments marked as destined for China from the main New South Wales thermal coal port of Newcastle. Total thermal coal shipments were much firmer in December than November, with Newcastle shipping around 14.4mn t, up from 11.1mn t in November.

There are still long vessel queues waiting off Newcastle, partly because of the continuing shutdown of one of the two shiploaders at the Newcastle Coal Infrastructure Group (NCIG) terminal. Shipping data show that no coal has been loaded from NCIG's Kooragang K10 berth since 25 November, compared with average loadings from the berth of 42,000 t/day in December 2019.

Over the January-November period, Australian exports to China fell by 10mn t on the year to 34.7mn t, which was a four-year low for the 11-month period. Exports to other northeast Asian markets were down by a further 8.4mn t on the year in January-November, including 3mn t declines to Japan and South Korea and a 2.3mn t drop to Taiwan.

The fall in thermal coal shipments to China, South Korea and Taiwan in November and over January-November was partly offset by increased sales to India and Vietnam, as well as smaller markets for Australian coal such as Pakistan, Indonesia, Thailand, Cambodia, Myanmar (Burma) and Chile.

Shipments to India rose to a record monthly high of 1.7mn t in November and, at 6.2mn t for the January-November period, were up by 3.1mn t on the year and on track to beat the record 6.71mn t annual total set in 2014.

Australian exports to southeast Asian markets grew by 3.2mn t on the year in the January-November period, driven in large part by a 3.6mn t increase in sales to Vietnam to 12.9mn t. And sales to Chile reached a four-year high of 1.8mn t in January-November, as the closure of a key mine in the country, weak production from Colombia and a need among Australian sellers to find alternative markets to China boosted inter-basin trade flows.

The Argus Newcastle 6,000 kcal/kg price averaged $58.75/t fob Newcastle in November, up from $54.20/t in October but down from $65.08/t in November 2019. It was assessed at $81.44/t on 31 December.

The Argus Newcastle 5,500 kcal/kg price averaged $38.79/t in November, down from $39.52/t in October and from $51.08/t in November 2019. It was assessed at $52.99/t on 31 December.

The heat-adjusted price differential between the Argus Newcastle 6,000 kcal/kg and 5,500 kcal/kg prices on a 6,000 kcal/kg basis widened to $23.63/t on 31 December from an average of $16.43/t in November and from $11.09/t in October.

Australia's average thermal coal export price was $53.39/t in November, up from $51.43/t in October but down from $66.19/t in October 2019, ABS data show.

The November prices were based on the Australian/US dollar exchange rate of $0.7265 used by ABS for the month.

Thermal coal export sales revenues were A$1.06bn ($770mn) in November, down from A$1.24bn in October and from A$1.52bn in November 2019.

By Jo Clarke

Australia thermal coal exports (mn t) Destination Nov % &#177; vs Oct* % &#177; vs Nov &#39;19 Jan-Nov % &#177; vs Jan-Nov &#39;19 China 0.53 -66.4 -80.0 34.72 -22.4 India 1.68 60.4 435.1 6.24 97.3 Japan 6.13 2.7 -7.8 65.18 -4.3 South Korea 2.34 -40.0 -23.1 30.19 -10.5 Taiwan 0.90 -35.3 -37.5 19.97 -10.3 Vietnam 1.41 20.3 129.0 12.85 38.8 Total 14.43 -14.4 -8.3 185.38 -5.4 Source: GTT, ABS *adjusted on a daily basis to account for longer and shorter months

Australian Jan-Nov thermal coal exports mn t

Australian thermal coal exports mn t

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