China-Australia relations: Beijing may feel pressure to lift coal bans amid dearth of steel materials

Name: Will iron ore be dragged into the ongoing China-Australia trade conflict?
Uploaded: 2021-01-29T20:30:08.000Z
Duration: 9 min 18 s
Description: Will iron ore be dragged into the ongoing China-Australia trade conflict?

China’s bans on Australian coal and copper are ‘causing self-inflicted wounds’ amid shortages of raw materials needed in industrial sectors

Coronavirus outbreaks in Mongolia and blockades in Peru have heaped pressure on supply chains, but China shows no sign of relenting yet

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Some of the more than 50 Australian coal vessels stranded outside Chinese ports since the ban have been allowed to dock and unload recently. But there is still a bottleneck at Chinese customs. Photo: Reuters

Su-Lin Tan

Published: 4:30am, 30 Jan 2021Updated: 11:44am, 1 Feb 2021

China may come under pressure to lift its ban on Australian coking coal and copper concentrates amid dwindling supplies of high quality raw materials, analysts said, although there are few signs that Chinese authorities are willing to relent just yet.

Australia is known for its premium hard coking coal, a crucial raw material for steel making.

Since October’s unofficial ban on both coking and thermal coal, steel mills, which are especially reliant on Australia’s hard coking coal variety, have resorted to using either more expensive coal of equal quality from countries like the United States, Russia, Canada and Mongolia, or lower quality coal from its own mines and other sources.

Pressure has built on steel mills’ profit margins, while concerns over the low quality of steel output have risen, as a result of using inferior coking coal.

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Will iron ore be dragged into the ongoing China-Australia trade conflict?

Some local mills and traders have petitioned their local governments over recent weeks for relief from the Australian coal ban, according to Fastmarkets, a pricing and research group.

Some of the more than 50 Australian coal vessels stranded outside Chinese ports since the ban have been allowed to dock and unload recently. But there is still a bottleneck at Chinese customs.

Australian exporters have to overcome more hurdles while customs officials consider whether they should let cargoes through, said Li Min, a Fastmarkets coal analyst.