Australia's trade minister Simon Birmingham is seeking to clarify if Beijing has instructed Chinese state-owned enterprises to allow imports of any but Australian coal and will consider taking the matter to the World Trade Organization (WTO), as fear grows that the ban will continue into 2021.
China would be breaching its commitments under the WTO membership and in relation to the free trade agreements signed between the two nations if it ordered its state-owned enterprises to boycott Australian coal, Birmingham said.
"These actions, if true, would potentially constitute discriminatory action against Australian producers, potentially constitute a breach of the type of undertakings that China has made to Australia and to the world in relation to their trade practices, and potentially harm China's ability to meet the other types of commitments it's given to the world in relation to its emissions profile," he said.
There are around 60 ships holding Australian coal waiting offshore China to unload. Much of that coal is owned by Chinese corporations and traders, with most sales being made at the point of departure from Australian ports. But sales to China from Australia have been extremely weak since mid-October when reports of the ban on imports of Australian coal emerged. Concern is rising among Australian coal mining firms that the diplomatic tensions between Beijing and Canberra will see the ban continue into 2021, rather than the quota resetting as previously hoped.
Australia exported around 13mn t of coal to China in June but only 725,000t in November, according to initial shipping data collated by Argus. Coal shipments to China usually rise in December ahead of the new quota opening in January, but only one shipment so far this month has had China as a confirmed destination. Instead shipments are rising to India, Japan, South Korea and southeast Asia as buyers in these regions take advantage of the relatively low price of Australian coal.
On the supply side the ongoing outage of a coal loader at Newcastle port in New South Wales and longer-than-usual Christmas and new year mine shutdowns are reducing Australia's coal output and causing long ship queues at Newcastle.
Argus last assessed the premium hard coking coal price at $101.90/t fob Australia on 14 December, down from $136/t in early October before China announced its ban on coal imports.
Argus last assessed high-grade Australian thermal coal at $75.48/t fob Newcastle for NAR 6,000 kcal/kg on 11 December, up from $59.38/t on 20 November and from a recent low of $46.18/t on 4 September. It assessed the lower grade at $52.03/t fob Newcastle for NAR 5,500 kcal/kg on 11 December, up from $37.66/t on 20 November.
