China may allow imports of some stranded Australian coal cargoes

China is consideringaccepting some stranded Australian coal cargoes, an effort that would help easea logjam of vessels that have stacked up off its coast for months. Theshipments that could be cleared are those that arrived before a ban onAustralian coal went into effect, said a person familiar with the situation,who asked not to be identified as the discussions are private.

The deliberations are at aninitial stage and any decision would need the approval of more senior Chineseleaders, the person said. The broader prohibition on Australian coal remains inplace, and ideally the cargoes would be resold to buyers in other countries,the person said.

China’s customsadministration didn’t immediately respond to a fax seeking comment.

The Australian governmenthad not heard anything official as of Friday afternoon but said a change wouldbe positive.

“[We] would welcome theunloading of vessels currently awaiting clearance into Chinese ports, ensuringthe welfare of those ships’ crews,” Federal Resources Minister Keith Pitt toldAFR Weekend.

“As strong supporters ofthe rules based trading system we expect all of our trading partners to abideby the terms of our trade agreements.”

The opaque nature of theAustralian ban, which has never been publicly acknowledged by Beijing, makespinpointing its start date difficult. The government was rumoured to haveordered its five biggest utilities to halt Australian purchases as early asMay, while in October, power stations and steel mills were told to stop usingAustralian coal.

In November, Beijingordered traders to halt purchases of a raft of the country’s commodities,including coal. Relations between the two trading partners have deterioratedsince Huawei Technologies Co was barred from building Australia’s 5G network in2018.

Most of the stranded coalis the type used to make steel, while a smaller portion is used for powergeneration, according to data intelligence firm Kpler. About 70 ships arewaiting to discharge, according to shipping data compiled by Bloomberg.

China has had to contendwith record prices for both types of coal this winter. The worst winter freezein decades has driven heating demand to an all-time high, and thrown thecountry’s energy markets into tumult. At the same time, China’s steel mills arechurning out record quantities to feed a state-funded infrastructure boom torescue the economy after the ravages of the pandemic.

China’s coal imports fromall countries surged to record levels in December, lifting the annual total forcoal above 300 million tons to its highest since 2013. In past years, Australiahas been the country’s second-biggest supplier after Indonesia.

China’s authorities arealso surveying the stranded carriers to identify shipowners, crewnationalities, and end users of the coal, the person said.