08-02-2021 China holding firm on Australian coal ban, according to data, By Michael Juliano, TradeWinds
China would appear to be holding firm on its ban on Australian coal, with ships now being diverted to other Asian ports in Vietnam, India, South Korea, Malaysia and Thailand to unload. This comes three weeks after reports that the world’s largest importer of Australian coal was considering the acceptance of some cargoes, amid fuel shortages and port congestion. Statistics from dry bulk intelligence provider Oceanbolt indicate that Beijing has not imported a single nugget since early January. Its data reveals that 60 dry bulk vessels, from kamsarmaxes to capesizes, have been waiting off China since as early as late May to as recently as 2 February, laden with more than 6m tonnes of Australian coal. That represents 2% of volumes imported from Australia in 2019.
Seanergy Maritime Holdings’ 179,000-dwt bulker Knightship (built 2010) has been waiting with a full load of Australian coal at China’s Bohai Bay since early June last year. It sailed to South Korea in early January for a crew change but then returned to await a discharge date. “From what we know in the whole Bohai Bay, there are no prospects for Australian coal discharging operations,” he said.
China enacted an unofficial ban on Australian coal on 6 November — after stopping or reducing imports on many commodities from the country in early 2019 — and then made it official on 14 December. Beijing’s move came after Australia barred Huawei Technologies from building its 5G network in 2018. Oceanbolt’s findings show 18 ships discharged in China as Beijing sought to stem Australian coal imports: three ships unloaded before the 6 November ban, 12 between then and the official ban in December and three after that. The last vessel offloaded on 7 January.
The findings also reveal that 21 coal-laden ships have left China’s shores as of 2 February after waiting anywhere between two days and seven months for ports in Vietnam, India, South Korea, Malaysia, Thailand and elsewhere in the region. Those diverted vessels have a total tonnage of 2.72m dwt, carried by nine capesizes and a dozen bulkers within the panamax and post-panamax asset classes.
According to John Kartsonas, founder of Breakwave Advisors, Beijing is under little real pressure to lift the ban going forward. He said China would likely diversify its coal supply, adding that the fuel is plentiful and would only become more abundant as Western nations use less. “China will not have a problem finding coal,” he told TradeWinds, adding that China, which imports only 8% of its coal, always has laden ships waiting off its shores for crew changes and payment from buyers. “Some is Australia related but not all,” he said.
China’s ban on Australian coal is actually good for the dry bulk shipping market because it results in higher rates due to tighter supply, he said, but there remains uncertainty over Beijing’s next move. “Unfortunately it is a guessing game,” he said.
Jefferies analyst Randy Giveans told TradeWinds: “Variables include the amount of inventories on hand, the amount of coal coming from sources other than Australia, and demand for heating, power plant usage, and steel production. One could imagine the demand side remains very high, so the big unknown is the supply side.”