Trade Data Show China Is Boosting Australian Coal Imports Amid Hopes of More Easing of Curbs

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Chinese traders increased their purchases of Australian coal in February, encouraged by the anticipated easing of regulations following the reopening of trading between the two countries after a two-year hiatus.

In January, Beijing permitted four government-backed firms, the steel giant Baowu Group and three state utilities, to import Australian coal, marking the first sign of easing its unofficial import ban.

“A company that acquires the licence could theoretically pass their cargo through customs,” said another Chinese utility official.

Due to the increasing demand in China, a full resumption of trade between the world’s biggest coal consumer and the world’s No. 2 exporter could dramatically affect global prices for the fuel used in power generation and steel production. This could also cause an upward trend in Australian coal exports globally.

According to ship-tracking data from Refinitiv and Kpler, “At least 15 vessels hauling about 1.4 million tonnes of February-loading Australian coal are bound for China.”

“The loading of more than 1 million tonnes of thermal coal has been scheduled for March,” a senior trader with a state-run Chinese utility said.

China’s return to the Australian coal market will likely bring competition for Chinese buyers as producers have increasingly sought out other markets during Beijing’s two-year absence.

During Tuesday’s earnings call, BHP CEO Mike Henry said, “We are looking forward to engaging with customers in China over potential coal sales, but we did need to pivot our sales.”

Despite this optimistic outlook, there are still concerns about how long these favourable circumstances will last, given increasing trade tensions between China and other nations, including Australia and the US.

The only certainty is that Chinese traders are taking full advantage of this opportunity. At the same time, it lasts, with reports that more than 50 vessels containing millions of Australian coal have arrived at various ports across China since early February.

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