BEIJING (Reuters) – A customs official at Dalian Port Group told Reuters on Thursday that it has banned the import of Australian coal and will cap the total import of coal for 2019 through its harbors at 12 million tonnes.
FILE PHOTO: A Reclaimer places coal in stockpiles at the coal port in Newcastle, Australia, June 6, 2012. REUTERS / Daniel Munoz / File Photo
The indefinite ban on imports from top supplier Australia, effective since the start of February, comes as major ports elsewhere in China to prolong clearing times for Australian coal for at least 40 days.
Coal is Australia's largest export earner and the Australian dollar tumbled on the news, falling more than 1 percent as low at AUD $ 0.7086 AUD = D3.
Five harbors overseen by Dalian customs – Dalian, Bayuquan, Panjin, Dandong and Beiliang – will not allow Australian coal to clear through customs, said the official. Coal imports from Russia and Indonesia will not be affected.
The ports handled about 14 million tonnes of coal last year, half of which was from Australia, said Gu Meng, analyst at Orient Futures.
The Dalian official declined to be named due to the sensitivity of the matter. Neither the Dalian Customs nor the General Administration of Customs immediately responded to a request for comment.
The Australian import was the reason for the ban.
However, it comes amid the simmering tensions between Beijing and Canberra over issues like cyber security and China's influence in Pacific island nations. Australia recently revoked the visa of a prominent Chinese businessman further straining.
Beijing has also been trying to restrict imports of coal more generally to support domestic prices.
Spot Australian coking coal at the northern Chinese port of Jingtang is 200 yuan ($ 29.85) cheaper per tonne than domestic prices, according to data tracked by Orient Futures. Prices of thermal coal are approximately the same.
Dalian imports both thermal and coking coal imports, but the clampdown is expected to have a larger impact on coal production coal used in steel making than thermal coal, used to generate electricity.
"It is hard to find a replacement for Australian coking coal since its sulfur content is very low," said a purchasing manager at a large coke plant in Hebei Province.
"The current inventory at the port should be sufficient to support the use of one to two months, but it could be a problem in the long term, especially if other ports also tighten imports," he added.
He declined to be named due to company policy.
The most-active coking coal contract for May delivery DJMcv1 rose more than 2 percent during the morning trading on Thursday.
"(The restriction) will further squeeze profit margins at the steel mill after Vale's accident has already driven up iron ore prices," said Gu at Orient Futures.
China has bought 28.26 million tonnes of coking coal from Australia in 2018, accounting for 43.5 percent of the country's total import of fuel, customs data showed.
Reporting by Meng Meng, Muyu Xu and Dominique Patton; Editing by Richard Pullin