China Resumes Buying Australian Coal as Unofficial Ban Ends

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China has resumed buying coal from Australia, signalling an easing of the ban. The move is a positive step towards improving economic ties between the two countries and should be welcome news for China and Australia. 

Beijing let the four government-backed enterprises import Australian coal in January, ending the halt that had been in place for the previous few years due to tensions between Beijing and Canberra.

China Starts Buying Australian Coal

Recent reports indicate that Chinese buyers have started purchasing thermal coal from Australia again, with shipments expected to double the pre-ban levels by June 2021. This is a sign that relations are beginning to improve between China and Australia, which could lead to further trade opportunities in the future.  

The complete restart of commerce with both nations may improve the price of fuel used in steel manufacturing and power generation globally. Experts anticipate a significant increase in coal procurement starting in March. This is due to the rapidly approaching summer and the anticipated increase in industrial activity.

“When trade resumes after a long gap, it takes some time to catch up, not to forget China’s domestic consumption is also going good. One thing is certain that the trade relations between these two countries are on the path to recovery,” a Southeast Asia-based miner said.

Also, by resuming imports of Australian coal, China is helping to stabilise the industry and provide much-needed relief for its workers. 

Moreover, several claims said that solo merchants have also been able to obtain Australian coal this month, even though the ban was only supposed to be loosened for miner-to-end-user transactions and not for general trading reasons.

“From what we know, not just the four Chinese companies, but traders have also been inquiring for Australian coal, which means there is room for them to execute trades,” an Indonesia-based trader said. “This might not impact Indonesian coal as for low-CV requirements; China will have to look around in Asia.”

The ban also forced Chinese traders to switch to domestic coal, with the majority choosing long-term contracts with domestic mines to guarantee a consistent supply. Domestic Chinese mines have declared that they will increase their output in 2023.

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