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Utilities companies and steel mills were verbally notified during the Golden Week holiday (October 1-8) in China to stop importing Australian coal this year with immediate effect, sources said.
State-owned steel mills such as Anshan Iron & Steel and Benxi Iron & Steel in northeastern China were among those that received the instructions, sources said.
A trader source said that compliance with the order would result in a loss of demand for Australian coking coal, which would then exert downward pressure on seaborne coking coal prices, especially for premium low-volatility hard coking coal.
In the premium mid-vol hard coking coal sector, prices are more resilient due to strong demand from India.
“I need to wait and see how steel mills react and the corresponding effects on the seaborne markets though,” he added.
“No steel mill will import Australian coking coal at this point, so it’s difficult to estimate prices now,” another trader source from China said today.
Fastmarkets’ premium hard coking coal, cfr Jingtang index stood at $141.15 per tonne on October 9, which was down by $3.95 per tonne compared with the previous day.
Power plants have also been asked to halt the imports of Australian thermal coal, a buyer source based in Australia said on Friday.
It is unclear why the Chinese authorities have decided on this course of action, but Australia has been one of the most vocal and early advocates of an independent investigation into the origins and early handling of the coronavirus outbreak, a stance that has attracted strong pushback from China.