News has been circulating lately about a potential ban on coal imports in China. Last year the Chinese Government imposed restrictions on coal imports in Q4 and seaborne volumes halved during November and December as a result.
We understand some ports have already informed their customers of similar measures this year. Several ports in the southern provinces of Guangxi and Guangdong have halted imports of coal for non-local traders and end-users since early August. More recently rumours were circulating that Jingtang, the largest coking coal port in China, has halted imports altogether as it has already exceeded its annual quotas.
There is no official announcement yet, but the rumours and the lack of direction from Beijing are causing traders to delay their purchases.
To get a better picture of the situation and assess the possibility of another blanket ban on coal imports, we took a deep-dive into China’s coal imports so far this year. The result is quite concerning.
Out of the 72 ports that we reviewed, 24 have exceeded their imports in 2018, and another seven are about to reach last year’s levels. Some of the major ports, including Jingtang, Lanshan, Caofeidian, Xiamen and Xiuyu, have exceeded their quotas by as much as 25-50%. Others, such as Fangcheng, have about 1mt left before they reach their 2018 limit.
No one seems to know what will happen and given the Golden week holidays and the Communist Party’s 70th anniversary, we do not expect to hear anything from the officials at least until after the holidays.
The bearish view is that the Government will impose a ban similar to that in 2018. Under such circumstances, seaborne imports in Q4 could drop by as much as 47%, from an average of 21.8mt per month during Jan-Sep* to 11.5mt per month in Q4. That would have a significant impact on ship demand.
A more optimistic view is that given the economic slowdown and geopolitical tensions, the Government will be more tolerant this time around and allow imports to exceed last year’s levels.
Frankly, we do not know how things will evolve. However, we acknowledge that the risk of another ban is quite significant.
Source:Arrow
The opinions expressed herein are the author's and not necessarily those of The Xinde Marine News.
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