Coking coal customs declarations tighten again

Some Chinese steel producers with Australian coking coal cargoes arriving at ports in Guangdong province and Fuzhou in Fujian province have been prevented from undergoing customs declaration, a likely prelude to similar restrictions eventually being imposed at more ports across China.

At least two Chinese steel producers, one in the east and another in south China, have confirmed that customs declarations at all ports in these two regions will be halted starting today afternoon.

"Our cargo has just arrived at the port today," one of the steel producers said. "Hopefully it will be able to clear customs just before the halt takes effect." Importers of Australian thermal coal were informed of the clearance halt as early as 25 October, although Fuzhou port was still understood to be accepting coal cleared through other customs authorities.

The largest coking coal import port of Jingtang, as well as Caofeidian in Hebei province, have blocked coal import clearance as of July because import quotas for the year were rapidly depleting.

Checks with major steel producers in the north and northeast region revealed that similar restrictions have not yet been imposed at ports there. The northeast ports were known to have had one of the strictest port restriction policies in the first half of this year, resulting in more leftover import quotas and allowing for restrictions to be considerably looser in recent months.

But the enhancement of coal import controls at ports across China is not expected to have a major impact on Chinese demand as most of the restocking for the year has already been completed. Argus assessments for premium hard low-vol coking coal delivered on a cfr China basis averaged $164.69/t cfr from August-September, spurring Chinese mills to restock aggressively and pushing August imports to an all-time high of 4.49mn t. Such prices are low compared to an average import price of $195.64/t cfr China from June-July, while premium domestic prices above the $190/t ex-mine level continue to generate arbitrage opportunities.

Chinese imports of coking coal fell by 12pc last month to 7.96mn t from an all-time high in August, according to customs data. This trend likely has continued through October and may be repeated in November as steel producers complete their restocking requirements and coal import restrictions raise new obstacles.