The list of products banned by China for import continues to grow: coal, barley, wine, lobster, sugar, fruit and barley trade has also fallen dramatically with the imposition of an import tariff in excess of 80 per cent.<\/p>\n
Coal is by far the biggest value trade impacted. In 2019, Australia exported A$13.7 billion worth of coal to China. This included A$9.7 billion in metallurgical coal for steel making and A$4 billion in thermal coal for electricity generation. In the period November 2019 to November 2020 inclusive, however, statistics indicate that exports of both commodity types to China fell dramatically, 85 per cent and 83 per cent for metallurgical and thermal coal respectively.<\/p>\n
China is believed to have some extent shot itself in the foot with this policy \u2013 while China denies that a shortage of coal is responsible it is known that a number of Chinese provinces experienced black-outs in late 2020. Australian coal is calculated to only account for two per cent of coal consumption in China but it is nevertheless thought to play a significant role in maintaining a reliable coal supply to power stations in China\u2019s southeast coastal provinces.<\/p>\n
The effective block China has put on coal trade with Australia has also led to a difficult situation with coal shipments. At one time as many as 75 coal ships were sitting off China waiting to discharge but this is believed to have reduced to just under the 50 vessels at the end of February.<\/p>\n
The number of vessels is reducing as buyers in other countries are found. Australia is expected to sell more coal to existing buyers and to find new buyers for its coal largely compensating for the loss of China\u2019s business \u2013 India and Japan being two major customers.<\/p>\n
To meet its purchasing requirements China is similarly looking further afield \u2013 it has, for example, recently started sourcing South African coal something it last did as far back as 2015. Looked at from a longer-term perspective, it is also relevant to note that as far as thermal coal is concerned then a reduction in China\u2019s requirement from overseas is on the cards anyway, irrespective of tensions with Australia.<\/p>\n
While it differs from province to province in China, in certain provinces there is a distinct emphasis on reducing reliance on coal as a means of electricity generation. Significantly, China\u2019s eastern coastal regions will continue to close power plants over the near to medium term with power generation capacity shifting to the western provinces and these being supplied by nearby domestic sources of coal.<\/p>\n
Equally if not more significant, it is China\u2019s stated aim to peak its carbon emissions before 2030 and achieve net-zero by 2060. This is a major structural change which inevitably would have spelt a reduction in imported Australian thermal coal volumes.<\/p>\n
The fact that this is happening now may ultimately prove to be a good thing in terms of Australian producers identifying clients that may prove to be able to offer a longer term requirement. As regards the other commodities banned by China it is not all doom and gloom there either: as one Aussie known to the writer quipped: \u201cMate we have never had so much lobster available and all at bargain basement prices!\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
COMMENT: Tensions between China and Australia continue and appear to be progressively negatively impacting trading arrangements, writes Mike Mundy.<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[103],"tags":[],"sponsor":[],"class_list":["post-1359","post","type-post","status-publish","format-standard","hentry","category-the-strategist"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts\/1359","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/comments?post=1359"}],"version-history":[{"count":0,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/posts\/1359\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/media?parent=1359"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/categories?post=1359"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/tags?post=1359"},{"taxonomy":"sponsor","embeddable":true,"href":"https:\/\/www.portstrategy.com\/greenport\/wp-json\/wp\/v2\/sponsor?post=1359"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}