China will allow all domestic companies to import coal from Australia, ending trade restrictions that were first imposed in late 2020, Bloomberg reports.
According to sources familiar with the decision, ports and customs offices have been told to allow overseas cargo into the country, including Australian coal. The de facto ban was partially eased in early January when four major state-backed importers were given permission by state authorities to resume purchases of Australian coal.
Australian leaders have hailed the end of restrictions as a key step in restoring amicable relations between the two nations.
As the world’s largest producer and consumer of coal, China’s coal imports last year exceeded 290 million tons.
Quality coal is in high demand from steelmakers and power plants in China. According to China’s top coal lobbying group, imports could reach one million tons in the first half of March alone as a result of the lifted restrictions.
However, Beijing’s demand for Australian coking coal, used for steelmaking, remains low despite the end to the ban because supplies from local mines, in particular those in Mongolia and Russia, remain cheaper, Reuters reports.
Last year, China’s imports of Russian coking coal doubled from 2021, and imports from Mongolia rose 82% year-on-year.
“We won’t see Australian coal starting to flow until we see that arbitrage window open again,” said Lloyd Hain, managing director of mining research firm AME Group in Sydney. “The only way China prices are going up is if we see a surge in steel production, and that doesn’t look like it’s going to happen in the next month or so.”
Before restrictions were imposed in 2020, China bought over 30 million tons of coking coal from Australia, accounting for around 40% of the country’s total imports. However, only one Australian coking coal shipment, bought by the China Baowu Group, has reached China since the partial lifting of restrictions in January, according to traders and ship tracking data.