China’s metallurgical coal buyers remained largely unfazed as more details emerged of port restrictions tightening on cargoes arriving from main supplier Australia, market sources said.
Dalian Customs told traders at a meeting on Wednesday that only cargoes from Indonesia and Russia were being allowed to berth at the five northern ports of Dalian Bay, Bayuquan, Panjin Port, Dandong and Beiliang, sources in China told S&P Global Platts.
A quota of 12 million mt of coal was also being imposed on arrivals at Dalian port over February-December, the sources said. This is a few million mt less than the typical volume received in the same period in previous years, according to the sources. Official comparative data was not immediately available.
Sources at two steelmakers that use Dandong and Bayuquan ports said no official advisory had been issued by port authorities. “It is unlikely to ban just Australia’s coal; I think the quota applies to all coal from regions including Australia, Russia, Mongolia and Indonesia,” one of the sources said.
End-users in northeast China accounted for 25.89% of the premium hard and hard coking coal trade volume that Platts observed in 2018.
Reports of China restricting Australian metallurgical coal imports initially surfaced in early February, when customs clearance for cargoes from Australia was heard stretching to 40-45 days from the usual 20 days.
Despite this, Chinese buying activity picked up after the Lunar New Year. A total 735,000 mt of Australian premium hard and hard coking coal was traded in China over February 14-21, according to Platts data. The Platts Premium Low Vol CFR China marker has risen $8/mt since participants returned to the market on February 11.
Market participants attributed the strength in CFR prices in February to tight supply generally for March-April, which was having more bearing on the market than the policies imposed on Australian coking coal.
“There are not many cargoes in the market and with Anglo American’s mine accident [in Queensland earlier this week], sentiment has been positive,” a source at major steelmaker in north China said. “Besides, it’s merely a delay for customs clearance. Cargoes can still be unloaded at port and that gives us confidence,” the steelmaker added.
“The situation at northeast China port looks serious, but end-users elsewhere in China are still seeking cargoes,” a Chinese trader noted.
A source at a major steelmaker in east China agreed, saying: “Prolonged customs clearance is OK for us. We will continue to consider Australia’s coking coal when prices are right.”
A source at a steelmaker in south China said his recent Panamax cargo of Australian coking coal had been delayed by 10-15 days, but was cleared by customs earlier this week and Australian “vessels were not banned”.
Market sources noted that restrictive policies on Australian coking coal may support domestic coking coal prices. “We can expect some changes in domestic coking coal prices in the near term,” one trader said.
China’s domestic coking coal prices have remained largely stable since the start of the year as production and activity typically slows ahead of Lunar New Year. Coking coal futures traded on the Dalian Commodity Exchange rose Thursday, with the most liquid May contract settling at Yuan 1,285.50/mt, up Yuan 26.50/mt day on day.
Platts last assessed Premium Low Vol at $211/mt CFR China Thursday, up $6/mt day on day.
Source: S&P Global Platts