China-Australia relations: China turns to US coal to fill void created by Australia import ban, offers trade deal boost

China unofficially blocked Australian coal in October, and imports have dropped to zero since December, while the US sold nearly 300,000 tonnes of coking coal to China in February

China agreed to buy an additional US$52.4 billion worth of energy products from the US over two years as agreed as part of the phase one trade deal signed in January last year

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China unofficially blocked Australian coal imports in October amid a year-long political conflict, leaving many vessels stranded off its coast, before switching to imports from the US, South Africa and Colombia having previously relied on the likes of Indonesia, Russia, Mongolia and Australia. Photo: AFP

Published: 4:30am, 7 Apr 2021Updated: 11:47am, 15 Apr 2021

Coking coal exports from the United States have filled some of the void created in China by its unofficial ban on Australian exports of the commodity over the past five months as trade manipulation creates “winners and losers”, economists said.

China blocked Australian coal imports in October amid a year-long political conflict, leaving many vessels stranded off its coast, before increasing imports from the US, South Africa and Colombia having previously relied mainly on the likes of Indonesia, Russia, Mongolia and Australia. Since the ban on Australia, China’s main coal suppliers have increased or maintained their exports to China.

And while only representing a small fraction of Australia’s pre-ban coal exports to China, the US sold nearly 300,000 tonnes of coking coal used in steel production to China in February from nearly zero in October, China customs data showed.

The imports of American coal, while helping fill the gap created by the Australian ban, also go towards China’s commitment to buy an additional US$52.4 billion worth of energy products from the US over two years as agreed as part of the phase one trade deal signed in January last year.

China has met 80 per cent of its energy purchase commitments with the US so far this year, according to an update by the Peterson Institute for International Economics’ senior fellow Chad Bown two weeks ago, although it hit only 39 per cent of the target in the first year of the deal in 2020.