Lower Australia ship queues add to China coal ban fears

Coal ship queues off Australia's Queensland have shrunk as concern grows that the Chinese import ban will impact the 2021 import quota, putting significant pressure on coal mining firms and port operators.

The vessel queue outside the adjacent ports of the Dalrymple Bay Coal Terminal (DBCT) and Hay Point has shrunk to 12, after it rebounded to 21 in early November from a low of 12 in late September. It declined to 23 at Gladstone from 32 a month earlier and there are no ships waiting to enter Abbot Point compared to three vessels a month earlier.

Ship queues usually grow at Australian coal ports in December, as buyers look to acquire coal in preparation for delivery into China when the new annual import quotas open in January. This year, with dozens of ships full of Australian coal waiting outside Chinese ports, queues are at an unseasonal low compared to last December.

This unseasonably low ship queue may be due to the large ship coal queues offshore China or could be an early sign that traders believe that China will maintain its import ban on Australian coal into 2021. This could imply that the diplomatic tensions between Canberra and Beijing have derailed the usual market mechanism of new Chinese coal import quotas that are applied in January.

Canberra could further upset Beijing this week if it uses new powers to veto the state of Victoria's Belt and Road deal with China.

Concerns that the diplomatic tensions will affect coal trade into 2021 have weighed on Australia's coal ports, with shares in the new Dalrymple Bay infrastructure fund, which owns 51pc of DBCT, falling by 16pc on their first day of trade yesterday. Credit agency S&P Global has revised down its liquidity assessment for North Queensland export terminal, which was formally Adani Abbot Point terminal, to less than adequate, citing in part uncertainty about what it will receive from coal handling charges at the port. Gladstone shipped no coal to China in November.

Coal mining firms are also looking to cut production while planning for an extended shutdown over the Christmas and New Year period, following the example set by US energy firm Peabody at its Metropolitan coking and thermal coal mine in New South Wales.

Argus last assessed the premium hard coking coal price at $103.35/t fob Australia on 8 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 $70.33/t fob Newcastle for NAR 6,000 kcal/kg on 4 December, up from $59.38/t on 20 November and from a recent low of $46.18/t on 4 September.

By Jo Clarke