Australia is “deeply disturbed” by reports of Chinese restrictions on its coal

Australia is "deeply disturbed" by reports of Chinese restrictions on its coal
Australian Trade Minister Simon Birmingham said on Tuesday that “Deeply disturbed“According to new reports in Chinese state media that the country’s largest economic planner has effectively banned some imports of coal from Australia. Global Times, a popular state-run newspaper, I mentioned at the end of last week The country’s National Development and Reform Commission has given power plants approval to purchase coal from abroad without restrictions – with the exception of Australia.

Birmingham told National Radio Australia if this was true, the reports “indicate discriminatory business practices published by the Chinese authorities.” China has already banned or imposed tariffs on a host of other Australian exports.

In response to a question from journalists on Tuesday about the reports, the Chinese Foreign Ministry directed questions to “relevant authorities.” But spokesman Wang Wenbin admitted that “the Chinese authorities have recently taken relevant measures against some Australian products exported to China in accordance with the law and regulations.”

Meanwhile, Australian Prime Minister Scott Morrison said, Reporters in Australia on Tuesday The government is “seeking clarifications” about the reports, adding that the country has not yet heard from the Chinese government. He called Reports that China is banning Australian coal “A bad result for the trade relationship” between the two countries.

Relationships have been deteriorating since April, when Morrison called for an international investigation into the origin of the coronavirus pandemic. Beijing described the move at the time as “political manipulation.”

In the months that followed, China imposed exorbitant tariffs on Australian winemakers, banning or taxing exports of other products, including beef and barley.

Morrison said on Tuesday that Australia sends A $ 4 billion ($ 3 billion) in thermal coal to China each year, adding that Japan is a larger market than China for those exports. Thermal coal is mainly used to generate power. In total, Australia exported some 14 billion Australian dollars (10.5 billion dollars) in coal To China in the 2018-2019 fiscal year.
But it is difficult to gauge the impact of any move against Australian coal on trade. Australian Media Noted weeks ago That hundreds of millions of dollars in coal were already locked up off the coast of China, an indication that Beijing has been putting at least unofficially pressure on Australia’s vital mining industry.

“This blackout makes it difficult to quantify the amount of escalation this news represents,” said Sean Lang Cake, chief economist at Oxford Economics, referring to the current turmoil in the thermal coal trade. “It is clear that these matters have not been resolved, and it is difficult not to see this news as a further deterioration.”

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Investors in Australia’s major coal producers view these reports as a bad sign. Coronado Global and Yancoal Australia shares were down more than 8% in Sydney on Tuesday. The Whitehaven Coal is down nearly 6% on Tuesday, down 10% so far this week.

Analysts at ANZ Research wrote in a research note that Chinese reports confirm “what has been assumed since reports emerged of import restrictions on coal from Australia in October”. They noted that although China was an important market for Australian thermal coal – it accounted for nearly a third of Australia’s total exports in 2018 – its market share has been declining since then.

“Australian exporters found additional buyers in South Korea, Vietnam and Japan,” the analysts wrote. “As such, we see Australia’s thermal coal exports hold up relatively well, despite the Chinese ban.”

Economists note that other mining materials, mostly iron ore and coke used in steelmaking, make up an especially large share of Australian exports. Langkik told CNN Business earlier this month that restrictions on such exports are unlikely, given how dependent China’s steel industry is on them. (Iron ore prices were traded at Highest levels in years, This is partly due to higher demand as China recovers from the epidemic.)

Angus Watson contributed to this report.

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