China expected to relax coking coal import restrictions


China’s customs is expected to begin accepting coking coal imports soon at most Chinese ports with the start of the new year.

Customs declarations are expected to resume at most ports in north and south China, including the main coking coal import port of Jingtang, along with other ports of Jinzhou, Changzhou, Xinsha, Fangcheng and Huanghua, coking coal traders said. Some ports used mainly by power utilities have already begun to allow thermal coal imports to be declared. Waiting times for customs declarations to be completed is expected to be around 15 days, down from 30-40 days when restrictions were at their strictest.

“At the moment there are about 40 vessels waiting in line for declaration at Jingtang port,” a Hangzhou-based trader said. “This has the potential to bring some upside to prices closer to mid-January, when Chinese demand should also pick up for pre-lunar new year restocking. But the upside likely will not last long.”

This is especially true for steel producers that have been unable to secure any imports throughout November and December last year because of restrictions, and now have more urgent requirements.

China introduced a quota system in 2018 to prevent coal imports from exceeding 2017 levels. The move was aimed at protecting domestic thermal coal producers, but coking coal imports have also been blocked. Customs declarations were stifled in late 2018 as the quotas ran out, sending the cfr China premium low-volatile hard coking coal index from near parity in late November to discounts of more than $20/t to the fob Australia index in December.

Relatively more stable steel prices in recent days have also reduced expectations of more downside to coking coal prices. But most steel producers are happy to wait on the market sidelines for now to see if prices will drop further before making a move, a Beijing-based trader said.

A south China steel producer has stressed that although restrictions have been lifted, no vessel has actually passed through declarations at the moment. “It is still unclear how long vessels will take to complete the declaration process, so we have to wait and see,” he added.

A cargo that has landed at Huanghua port in north China has been allowed to pass through customs, while another cargo at the Bayuquan port is still not allowed to pass through customs, a coking coal and coke trader said.

Expectations of more spot supplies in this year’s first quarter, along with an easing of vessel queues at Queensland’s Dalrymple Bay Coal Terminal in Australia have eased concerns about supply tightness plaguing the market throughout much of the fourth quarter of 2018.

But the recent closure of the BHP Mitsubishi Alliance Saraji mine in Queensland’s Bowen basin region following a fatal accident has again raised concerns about supply security. Customers have so far not received any updates on the potential disruptions to their contracted volumes.


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