Custom Delays: Chinese Traders Stop Buying Coal from Australia
Australia which is the biggest supplier of coal to the top consumers of the World including China is in a spot of bother. The customs in China have increased the clearing times to twice than before, and now it takes at least 40 days to clear the cargoes. That has forced the Chinese coal traders to stop ordering the fuel from Australia and has resulted in a drastic fall in its prices. Moreover, traders and brokers said that cargoes from Australia was only affected and that has made the traders from China stop buying from Down Under. The Spot Cargo prices for coal from Newcastle, Australia has reduced by more than a quarter from its peak in 2018 and is now below $90 for a barrel due to less demand mainly from China and more supply.
What the traders and merchants are saying?
Though the exact reason behind China is increasing the clearing and stepping up the checks on cargos is not unknown, it can be attributed to the strain in relations over a range of issues which include the recent cyber-attack on the Australian lawmakers’ network and also China’s growing influence in the Pacific Islands nations. The Chinese General Administration of Customs chose not to respond to a request for their comments.
A manager of a Shanghai trading company who orders Australian coal of 4lac tonnes said, “We have stopped ordering coal from Australia because it is unknown how long the restriction will last’. The manager further added that some port authorities had informed that it is not just the thermal coal, but even the cooking coal cargoes would be delayed and take longer than before to clear the customs. The clearance from customs which usually takes 5 to 20 days now takes up to 45 days. The international traders also confirmed that there were delays an Australian trader said ‘Yes, the Chinese ports are holding up all thermal shipments ex Australia for 40-60 days. My clients are only buying spot Indonesian coal’.
While Australian Coal prices are down, it is gain for countries like Russia and Indonesia. The international market traders and local Chinese traders said that there was a rise in demand for Coal from Russia and Indonesia to overcome the shortage created from Australia. In 2017, China had limited its Coal imports due to low energy efficiency and high impurity levels. However, a merchant who specializes in South-East Asia supplies said that the demand for Indonesian coal from China is strong.