China seeks to suspend coal imports at all ports

Beijing verbally told all regional customs authorities today to suspend coal imports because the country's receipts appear set to exceed the limit set for 2019.

Ports in east China's Jiangsu province — including Jiangyin, Zhenjiang and Zhangjiagang — have halted the berthing of vessels with coal cargoes, market participants said.

But it still unclear as to whether other provinces and regions have implemented the suspension of imports. Coastal power utilities are still communicating with local customs authorities as they try to push the cargoes they have booked through customs.

The order to suspend imports today followed a halt to cargoes clearing customs into a few Chinese provinces from the start of last week. At least three provinces — Guangxi, Guangdong and Jiangsu — tightened import curbs further last week by suspending the clearing of coal altogether for the rest of this year.

Domestic spot and term coal could gain some support from the block on imports, especially as coal producers and power utilities have just started to negotiate 2020 mid- and long-term contracts. A Guangxi-based power plant is considering booking more domestic coal as it has been asked by the customs authority not to use imported material that has arrived at local ports until at least the end of this year.

The market for imported coal saw a December-loading geared cargo of GAR 4,200 kcal/kg (NAR 3,800 kcal/kg) Indonesian material sold today at $33.85/t fob, in line with a similar trade yesterday. But this was lower than the Argus assessment of $34.33/t on 8 November. Many market participants expect imported coal prices to keep falling for the rest of this month given the suspension of imports.

Today's order appears to follow a similar pattern adopted by Beijing last year, when it gradually tightened restrictions on coal imports from October. It forbade the clearing of any trading firm's cargoes that were not sold directly to Chinese utilities, while banning the clearing of cargoes through customs jurisdictions that did not cover the area where the cargoes would finally be delivered to. The move caused a slump in imported coal prices, which could be repeated again this year if the curbs are strictly enforced. The prices of GAR 4,200 kcal/kg coal Indonesian coal and NAR 5,500 kcal/kg Australian coal dropped sharply to $28.73/t fob and $57.91/t fob Newcastle respectively on 3 December 2018 from $38.66/t and $67.15/t fob on 5 October 2018.

Futures prices rose sharply today during the Asian afternoon after the message spread about the wider import orders. The main January-delivery contract on the Zhengzhou commodity exchange closed at 557 yuan/t, up by Yn6.40/t from yesterday, on expectations that domestic coal prices will rise on the back of import curbs.

China's intake of imported coal rose by 11.3pc from a year earlier to [25.69mn t in October] (https://direct.argusmedia.com/newsandanalysis/article/2011612), preliminary customs data shows. But October imports were at their lowest point since April this year, as Chinese importers appeared in August and September to slow their bookings of October-arrival cargoes amid uncertainty about Chinese customs restrictions.

January-October intake was 276.24mn t, up by 9.6pc from the year-earlier period. The imports during January-October were 4.99mn t short of 2018 imports of 281.23mn t, which was set as the limit for full-year 2019.