Coal market participants in Jiangsu, China, have received notice from Jiangsu port agents of an impending halt to imports of coking and thermal coal, sources said Wednesday.
Two Chinese thermal coal trading houses said they were notified by their port agents during the afternoon to expedite the process of custom declarations for all upcoming imported coal at ports in Jiangsu.
“We are trying to submit all documents for affected cargoes for custom declarations at ports in Jiangsu and defer the laycan for other shipments of coal,” a South China-based thermal coal trader said.
A major Chinese steelmaker said he had received verbal confirmation from his port authority during the afternoon. “We were told to quickly submit our documents today before the halt becomes effective tomorrow” he said.
Another Chinese steelmaker said it had been told of an immediate halt on customs declarations.
Department of Commerce of Jiangsu province P.R. China was not available for comment. Zhangjiagang port authority declined to comment.
POSSIBLE IMPLEMENTATION ACROSS CHINA
Market sources said the halt on customs declarations could be implemented across China, effective Thursday until December 31. There were no official announcements or notices of such a move, sources said.
Sources said the move could be attributed to several factors, including the favorable arbitrage seen between domestic coking and thermal coal relative to seaborne prices, and China’s total coking and thermal coal import volumeyear to date.
“They did not provide any reason why but the reason is very simple. If they do not stop the imports of coal, domestic coking coal prices will not be supported,” a Chinese steelmaker said, referring to the decline seen in domestic coking coal prices this month.
“If seaborne coking coal prices are high, the situation probably won’t be like this. The gap between seaborne and domestic coking coal is just too wide,” he said.
According to Platts data, the arbitrage between seaborne and domestic coking coal of similar Premium Low Vol qualities has been pronounced this year at a $37.98/mt spread, with the seaborne material being the cheaper option.
Meanwhile, the General Administration of Customs, P.R China said the country imported 276 million mt of coking and thermal coal over January-October, up 9.6% year on year.
According to S&P Global Platts Analytics, China imported 189.5 million mt of thermal coal over January-September, up 6.9% year on year, and 61 million mt of coking coal, up 21.6%.
“Chinese market participants see the import curbs coming as China has long missed its target to keep 2019 coal import flat [year] on year. Despite the upcoming winter stocking activities in China, the impact on seaborne coal remains limited due to abundant Chinese domestic materials and high stocks,” a South China-based trader said.
Meanwhile, Chinese domestic thermal coal prices could rise as demand for the grade was expected to return for upcoming winter stocking activities, another South China-based trader said.
“There had been rumors earlier in September and October but no one paid much attention to it. While it was somewhat expected, it came rather suddenly,” a trader said.
For a steelmaker, however, it was more clear cut “We saw this coming. It was just a matter of time.”
Source:Platts
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