AGL 5.60 Decreased By ▼ -0.18 (-3.11%)
ANL 8.90 Increased By ▲ 0.02 (0.23%)
AVN 76.85 Decreased By ▼ -2.07 (-2.62%)
BOP 5.26 Decreased By ▼ -0.02 (-0.38%)
CNERGY 4.63 Decreased By ▼ -0.07 (-1.49%)
EFERT 81.27 Decreased By ▼ -0.33 (-0.4%)
EPCL 50.08 Decreased By ▼ -0.83 (-1.63%)
FCCL 13.16 Decreased By ▼ -0.22 (-1.64%)
FFL 5.69 Decreased By ▼ -0.03 (-0.52%)
FLYNG 7.07 Decreased By ▼ -0.08 (-1.12%)
FNEL 4.79 Decreased By ▼ -0.03 (-0.62%)
GGGL 8.80 Decreased By ▼ -0.10 (-1.12%)
GGL 14.55 Decreased By ▼ -1.33 (-8.38%)
HUMNL 5.69 Decreased By ▼ -0.08 (-1.39%)
KEL 2.63 Decreased By ▼ -0.03 (-1.13%)
LOTCHEM 28.60 Decreased By ▼ -0.45 (-1.55%)
MLCF 24.49 Decreased By ▼ -0.61 (-2.43%)
OGDC 72.43 Decreased By ▼ -0.02 (-0.03%)
PAEL 15.36 Increased By ▲ 0.01 (0.07%)
PIBTL 5.00 Decreased By ▼ -0.05 (-0.99%)
PRL 16.10 Decreased By ▼ -0.19 (-1.17%)
SILK 1.08 Decreased By ▼ -0.01 (-0.92%)
TELE 9.14 Decreased By ▼ -0.23 (-2.45%)
TPL 7.23 Decreased By ▼ -0.10 (-1.36%)
TPLP 18.61 Decreased By ▼ -0.34 (-1.79%)
TREET 21.68 Decreased By ▼ -0.32 (-1.45%)
TRG 136.71 Decreased By ▼ -4.44 (-3.15%)
UNITY 16.88 Decreased By ▼ -0.14 (-0.82%)
WAVES 9.86 Decreased By ▼ -0.04 (-0.4%)
WTL 1.41 No Change ▼ 0.00 (0%)
BR100 4,225 Decreased By -29.6 (-0.7%)
BR30 15,518 Decreased By -214.7 (-1.36%)
KSE100 42,150 Decreased By -243.4 (-0.57%)
KSE30 15,588 Decreased By -75.7 (-0.48%)
Markets

China is paying a high price for its ban on Australian coal: Russell

  • Australia's share of imports came down to zero from 68.4% in January-February 2020, according to the data, while the United States boosted its share to 9.1% from under 2%, and Canada went to 12.1% from 6.1%.
Published April 9, 2021
Follow us

LAUNCESTON: China is paying a high price for its unofficial ban on coal imports from Australia, with the cost of domestic and alternative foreign supplies rising for both thermal and coking grades of the fuel.

China, the world's biggest importer, producer and consumer of coal, has effectively ended imports from Australia, the biggest shipper of coking coal used to make steel and number two in thermal coal used to produce electricity, as part of an ongoing political dispute between the two nations.

The restrictions on imports from Australia came into effect in the second half of last year, resulting in China's imports dropping to virtually zero in the first two months of this year from a 2020 high of 9.46 million tonnes in June, according to Refinitiv vessel-tracking and port data.

However, China's consumers of imported coal have been facing higher costs, with prices for alternatives to supplies from Australia, both local and foreign, rising as the market adjusts to the unofficial ban.

In coking coal, the price of free-on-board Australian cargoes has been weakening since the ban was imposed, apart from the usual seasonal gain for the northern hemisphere winter.

The Singapore Exchange contract for Australian coking coal ended at $113.71 a tonne on Thursday, down 18.8% from the $140 that it reached at the start of October, just as the Chinese ban was coming into effect.

If a Chinese importer switched from Australian cargoes to those from the United States, the price difference has entirely reversed since the ban started to affect flows.

Coking coal free-on-board at the US east coast port of Hampton Roads, as assessed by commodity price reporting agency Argus, has surged to $152.75 on Thursday from $114 a tonne at the start of October last year, a gain of 34%.

This means that US coking coal is currently about $39 a tonne more expensive that supplies from Australia, and this doesn't account for the higher shipping costs given the longer distance from the US east coast to China.

China's domestic coking coal price has also been gaining since the restrictions on imports from Australia, with Dalian Commodity Exchange futures rising 16% from 1,353 yuan ($206.56) a tonne at the start of October to end at 1,573 yuan on Thursday.

This price isn't directly comparable to the free-on-board prices in Australia and the United States, as it includes freight and other costs as well as import taxes and duties.

However, it does show that Chinese domestic prices have been pushed higher, partially reflecting the higher cost of imports from sources other than Australia.

China's neighbour Mongolia has become its biggest supplier of coking coal, meeting 61.7% of imports in the first two months of this year, up from just 17.7% in the same period in 2020, according to official data.

Australia's share of imports came down to zero from 68.4% in January-February 2020, according to the data, while the United States boosted its share to 9.1% from under 2%, and Canada went to 12.1% from 6.1%.

While coking coal supplies from Mongolia are cheaper than those from seaborne alternatives, it's believed that they tend to track Chinese domestic prices, meaning it's likely that they have risen sharply as well, especially once transportation and washing costs are factored in.

Comments

Comments are closed.

China is paying a high price for its ban on Australian coal: Russell

Saudi Arabia extends term of $3bn deposit: SBP

Rupee remains unchanged against US dollar

Giving the govt a chance, sit with us and call elections: Imran Khan

Oil ticks up ahead of OPEC+ meeting, EU Russian oil ban

OMCs take a hit as petroleum sales drop in Pakistan

Pakistan's pitches from 'dark ages', says cricket chief Ramiz

India to continue buying Russian oil: ministry source

Imran Khan says Senator Azam Swati treated in 'vengeful manner'

Qurat ul Ain Fatima appointed new ECP spokesperson

OPEC set to stick or cut more amid plan to cap Russian oil price