China shows it still has cards to play on coal supply

High level machinations in China seem to be affecting the coal price. In the north they have just announced they will cut coal imports from North Korea whilst in the south they have been unofficially blocking imports in a customs go slow.

In Australia the thermal coal price has been recovering but it seems Beijing will cap these gains by allowing its domestic producers to come back on stream.

Guangzhou port, the largest coal hub in southern China, has halted foreign coal imports, according to traders who use the port and said they had been informed of the shutdown by customs authorities and senior company officials. Traders said the move caught merchants using Guangzhou by surprise – the port has 14 coal berths and can handle 60 million tonnes of shipments per year – and they also interpreted it as a sign that Beijing will bring local thermal coal supplies back on stream as prices start to rise.

“We were told by customs that the port has stopped accepting foreign shipments,” said one trader, who stressed he could not speak to the media in an official capacity.  “Starting this week, we will avoid using the Guangzhou port.” Another trader based at Guangzhou said his company has stopped booking supplies for October arrivals, despite increasing demand from utilities.  “And it’s not just happening in Guangzhou but right up the coast . . . ports have been given unofficial import quotas,” said the trader, who also asked not to be named. The person said ports had been ordered to “slow the whole system down” to add additional costs to imported coal, after imports of steaming coal for use in power stations surged 25 per cent during the first half of the year.

SOURCE: Reuters/AFR, Silas Berry, asiaconsult.org

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