Published: Fri, February 22, 2019
Finance | By Loren Pratt

Australia seeks clarification on China coal import 'block'

Australia seeks clarification on China coal import 'block'

"This could be a shot across the bow".

The US is seeking to secure a pledge from China it will not devalue its yuan as part of an agreement meant to end the countries' trade war, Bloomberg reported on Tuesday.

A day after Reuters said Dalian Port Group has imposed an indefinite ban on Australian coal and will cap overall coal imports for 2019 through its harbors at 12 million tonnes, Treasurer Josh Frydenberg cautioned against "jumping to conclusions".

A major Chinese port has reportedly banned imports of Australian coal amid tensions between the two nations over cyber-security and control in the Pacific. Details of the restrictions were also circulated on Chinese social media on Friday. China has said the concerns are unreasonable and has warned other countries of unspecified consequences if they follow suit in blocking Huawei equipment. "We look forward to continuing to cooperate and work together to maintain our strong and mutually beneficial trading relationship", he said.

Earlier, he said Australia was not being singled out.

While China has a history of using trade as leverage to help it achieve its foreign policy goals, it also regularly tweaks import limits to steer its coal market, the world's largest, as the country tries to ease its reliance on the fuel.

"We believe and understand that these are simple import quotas, consistent with what China has applied before and continues to apply and apply equally to all countries", Birmingham told reporters.

The source said he was not given a reason for the ban on Australian imports.

Ms Adams met with Wang Yilin, the chairman of oil and gas giant China National Petroleum Company for "friendly" talks earlier in the week, according to a story posted on the company's website on Friday, which suggests Australia's LNG imports to China are not threatened for now.

Coal imports from Russian Federation and Indonesia aren't being affected by the ban.

Coal is Australia's biggest export earner and the Australian dollar tumbled on the news, falling more than 1 per cent to as low as $0.7086.

Shares in Australian coal miners fell on Friday amid broad weakness in the resources sector, but losses eased in afternoon trade.

The most-active coking coal contract for May delivery rose more than 2 per cent during morning trade on Thursday.

FILE PHOTO: Coal is unloaded onto large piles at the Ulan Coal mines near the central New South Wales rural town of Mudgee in Australia, March 8, 2018.

Of the 14 million tonnes of coal the ports handled a year ago, approximately half came from Australia.

However, Mr Dhar said the message Chinese officials are sending is the worry.

The ban on thermal coal, which may seem sudden, according to one analyst, should not be surprising.

Trade Minister Simon Birmingham on Thursday night asked Australia's ambassador in Beijing, Jan Adams, to seek clarification from the Chinese government.

In the currency market, the Australian dollar was in the spotlight after employment numbers for January topped expectations. "Of course, Australian coal does not have a quality issue". With Beijing declining to confirm whether it is targeting Australia specifically even as some shipments have been delayed by customs as long as 40 days, the reasons behind the slowdown are unclear. China is expected to agree to buy more U.S. goods as part of a deal being brokered by negotiators in Washington this week. They have to think about what they can domestically manufacture to replace imports and the obvious place to start is coal and iron ore.

My Frydenberg rejected claims that the move by China is retaliation to Australia's decision to ban Chinese telecommunications giant Huawei from the 5G mobile infrastructure rollout.

"People should be careful about leaping to conclusions about this", Morrison told journalists in Auckland. "This is not the first time that, on occasion, local ports make decisions about these matters".

Diplomatic relations between the countries have been deteriorating since 2017, when Australian authorities accused China of interfering with its domestic affairs.

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