One of China’s biggest ports has banned imports of Australian coal and will cap overall coal imports for 2019 through its harbours at 12m tonnes, an official at Dalian Port Group has said.

The indefinite ban on imports from Australia, which is China’s top coal supplier, comes as major ports elsewhere in China prolong clearing times for Australian coal to at least 40 days, Reuters has reported.

Coal is Australia’s biggest export earner and the Australian dollar tumbled more than 1% to as low as US70.86 on the news.

The Australian trade minister, Simon Birmingham, has acknowledged the “unconfirmed and unsourced” reports and said the government had asked its ambassador in Beijing “to urgently clarify their veracity”.

Aussie tumbles after China moves to ban Australian coal imports at its Dalian port https://t.co/j0VoH3RtuZ pic.twitter.com/4OMVjHs1Qr — Minda Tangnaijit (@MindaTangnaijit) February 21, 2019

Five harbours overseen by Dalian customs – Dalian, Bayuquan, Panjin, Dandong and Beiliang – will not allow Australian coal to clear through customs, the official told Reuters.

Coal imports from Russia and Indonesia will not be affected.

The ports handled about 14m tonnes of coal last year, half of which was from Australia, said Gu Meng, analyst at Orient Futures.

The Dalian official declined to be named due to the sensitivity of the matter. Neither Dalian customs nor China’s general customs administration would respond to a request for comment.

No reason has been given for the ban, but a foreign ministry spokesman said on Thursday that China’s customs administration was testing coal imports for “environmental protection”. Geng Shuang said customs were conducting risk analysis according to the law.

However, the ban comes amid simmering tensions between Beijing and Canberra over issues such as cybersecurity and China’s influence in Pacific island nations. Australia recently revoked the visa of a prominent Chinese businessman further straining ties.

In a statement Birmingham described China as “a valued partner of Australia” and said the Australian government “trusts that our free trade agreement commitments to each other will continue to be honoured”.

“Australia is, and will continue to be, a reliable supplier of resources around the world,” he said.

“We continue to engage closely with industry on matters of market access. I met with the Minerals Council of Australia this week to discuss market access issues and our related representations to Chinese authorities.”

An editorial comment in the China Daily newspaper this week said that Scott Morrison had been “irresponsible” for suggesting that Beijing was the “state actor” behind the cyberattack on the Australian parliament.

“No matter whether he was assigning the malevolent acts to China or another country, it is irresponsible of him to cast aspersions in this way,” it said.

“Certainly it seems that when it comes to China, many politicians, have forgotten their professional ethics, and appear to have no compunction about letting their tongues wag maliciously about a sovereign nation and its companies.”

Likely that this is payback for banning @Huawei from the 5G Network.



'The indefinite ban on imports from top supplier Australia, effective since the start of February, comes as major ports elsewhere in China prolong clearing times for Australian coal to at least 40 days.' — Catweazle (@ITegoArcana) February 21, 2019

I bet if Aus lifted it's ban on Huawei's involvement in the #NBN and general telco infrastructure, these bans would somehow be relaxed.

Exclusive: China's Dalian port bans Australian coal imports, sets 2019 quota https://t.co/OP0vCoEH8K#auspol — Tailgator (@Tailgator1) February 21, 2019

Beijing has also been trying to restrict imports of coal more generally to support domestic prices.

Spot Australian coking coal at northern Chinese port Jingtang is 200 yuan ($29.85) cheaper per tonne than domestic prices, according to data tracked by Orient Futures. Prices of thermal coal are approximately the same.

Dalian handles both thermal and coking coal imports but the clampdown is expected to have a bigger impact on coking coal, used in steel making, than thermal coal, used to generate electricity.

“It is hard to find a replacement for Australian coking coal since its sulphur content is very low,” said a purchasing manager at a large coke plant in Hebei province.

“Current inventory at ports should be sufficient to support usage for one or two months, but it could be a problem in the long term, especially if other ports also tighten imports,” he added.



The most-active coking coal contract for May delivery rose more than 2 percent during morning trade on Thursday.

“(The restriction) will further squeeze profit margins at steel mills after Vale’s accident has already driven up iron ore prices,” said Gu at Orient Futures.

China bought 28.26m tonnes of coking coal from Australia in 2018, accounting for 43.5 of the country’s total imports of the fuel, customs data showed.