SINGAPORE, Oct.5 (Reuters) – China releases Australian coal from bonded storage, despite unofficial nearly-year-long unofficial import ban on fuel, as it scrambles to alleviate domestic electricity shortage resulting from a coal shortage, traders familiar with the mentioned file.
The electricity crisis in the world’s largest coal consumer comes as strong demand from manufacturers, industry and households has pushed prices to record highs and triggered widespread restrictions. Read more
An estimated one million tonnes of Australian coal have remained in bonded warehouses along the Chinese coast for months, not cleared by customs after Beijing’s unofficial ban last October, a trade official said. Read more
“Some of the Australian coal stranded in Chinese ports started to be released at the end of last month… although a lot of these (cargoes) have already been diverted to markets like India,” said the trader, based in eastern China.
A second trader said the release of bonded storage would begin this week.
The main economic planner, the National Development and Reform Commission, did not immediately respond to a request for comment.
While China has urged major miners to increase production and called on power operators to increase coal imports in an “orderly fashion” to ease supply squeeze, it has refrained from directly resuming imports from Australia, formerly its second largest supplier after Indonesia.
However, at one million tonnes, or the equivalent of a single day of China’s coal imports, releasing stocks will do little to quench the market’s thirst for coal.
“Without a resumption in Australian coal imports, the supply shortage will be there for some time, as it takes time to revive domestic production after nearly 5 years of production downs,” said a third trader based at Beijing.
“I’m not optimistic. The shortage will last at least until the fourth quarter and possibly until after February or March when the heating season ends.”
Exports from other key suppliers, such as Russia and Mongolia, were curtailed by limited rail capacity, while shipments from Indonesia were hampered by the rainy weather, traders said.
This led utilities such as Zhejiang Energy in eastern China to import Kazakhstan’s first thermal coal imports on Monday, following its first imports of U.S. thermal coal in June and July. Read more
China imported 197.69 million tonnes in the first eight months of 2021, down 10% on the year. But August coal imports rose by more than a third due to tight domestic supply.
To ease the pressure on supply, the China State Railway Group on Tuesday pledged to allocate more freight capacity to ensure sufficient coal stocks for 14.4 days of use at 363 power plants with direct rail access, state media said.
Additional reporting by Melanie Burton in Melbourne and Huang Binbin in Beijing; Editing by Clarence Fernandez
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