Aussie coal still finding its way to China through other markets | Ralph-Lauren

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The international coal trade has reshuffled as a result of China’s ban on Australian imports, with a major miner saying locally produced coal is still making its way to the Asian superpower through other markets.

In its December quarterly report released on Thursday, Whitehaven Coal said the restrictions — which came after China imposed bans and punitive tariffs on Australian products including wine, barley and beef — had altered seaborne coal trade flows.

“China has supplemented its domestic production with higher cost coal from alternative countries such as Russia, Indonesia and South Africa,” the company said.

“In addition, late in 2020 China lifted its total import quota in response to strong domestic demand and an extremely cold winter.

“Instead of being delivered to China, Australian coal is now finding customers in alternative destinations, including India, Pakistan and the Middle East, and traded coal historically delivered into these markets is finding its way into China.”

The ban has left ships laden with Australian coal languishing off China’s coast, unable to unload, and the Federal Government considering seeking intervention by the World Trade Organisation.

Whitehaven said the absence of Chinese buyers had weakened prices for Australian metallurgical coal, used in steelmaking.

But demand for Whitehaven’s metallurgical coal in the markets of India, Japan, Korea, Vietnam and Taiwan had increased as economic stimulus activity boosted steelmaking.

“Following India’s mid-year COVID-19 lockdown, demand has rebounded strongly and it continues to be a growing destination for Whitehaven’s metallurgical coal products,” the company said, adding it expects sales volumes in 2021 to return to pre-pandemic levels.

Chief executive Paul Flynn said the China ban had little impact on Whitehaven’s sales base.

“We’re still selling the same tonnes to the same customers as we were previously,” he told a teleconference.

“We are seeing lots of players who would otherwise have sold coal into China selling it into areas where they hadn’t been doing so in the past and China having to buy coal from non-traditional sources to meet their needs whilst this coal ban plays out.

“I haven’t heard any news on changes in quota. Quite the contrary, there seems to be more rhetoric about a firmer position from the Chinese about not taking Aussie coal.

“But as I say that doesn’t really affect us too much in the end.”

The miner also said seaborne markets for thermal coal, used in power production, continued to rise from the low point hit in August due to supply curtailments coupled with increased energy demand in Asia.

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