BHP appears to confirm China’s reduced demand for Australian coal

BHP Group says it has received deferment requests from Chinese coal customers, confirming reports China has put a freeze on accepting Australian coal amid trade tensions between the two countries.

“We understand there may be some new developments relating to how China plans and moderates imports versus its own domestic coal production,” BHP Group chairman Ken MacKenzie said on Wednesday.

“Our commercial team has recently received deferment requests. It would be concerning if the rumours were true.”

Mr MacKenzie did not specify whether he was referring to BHP’s thermal or metallurgical coal.

Trade industry reports late last week suggested some Chinese ports had been told not to accept either type of Australian coal, and that such shipments were being sold along to other markets at the last minute.

China’s coal imports had been expected to slow in the second half after heavy imports earlier this year.

Imported coal is seen lifted by cranes from a coal cargo ship onto a truck at a port in China
China’s deferment of Australian coal orders could help shore up its domestic industry.(Reuters)

Weaker than expected demand due to coronavirus-related disruption was also expected to spur China to act to support its domestic industry.

Customs data showed China had taken less coal than usual from Australia and also Indonesia in the past month.

Australian politicians have played down the issue, with Prime Minister Scott Morrison on Tuesday characterising China’s move to put quotas around imports as “not uncommon”.

Australian coal shipments to China were delayed in February last year.

Australia’s ties with its top trade partner soured in 2018 when it became the first country to publicly ban China’s Huawei from its 5G network and worsened after Canberra called for an enquiry into the origins of the coronavirus.

China is the biggest importer of Australian coal, taking 27 per cent of its metallurgical coal in the year to June and 20 per cent of its thermal coal, which the Australian government estimates was worth $13.7 billion last year behind China’s iron ore imports which were worth $84.9 billion.