Chinese state-owned steelmakers have been verbally notified to stop importing coking coal from Australia, according to media reports.
The halt shows that the tension between China and Australia increased. It is not certain when the halting of coking coal imports will end or how it will affect long-term contracts.
China’s high-quality coking coal production is scarce and so steelmakers in the country depend on overseas suppliers, with Australia accounting for over half of imports. Traders suspect that the move by China may be about reducing import volumes from Australia rather than about imposing a complete ban.
China is expected to increase its coking coal imports from the US, which have been slow to pick up this year due to the coronavirus.
The value of Australian exports of coal to China increased by eight percent to $7.3 billion in the first six months of the current year, while the value of Australia’s exports of iron ore to China rose by 16 percent to $43 billion, year on year.