China allows some Australian coking coal to unload

Eight vessels of Australian coking coal will be allowed to discharge at Jingtang and Caofeidian ports in north China, in what is likely a humanitarian move but has raised hopes for an end to China's ban.

The vessels do not have customs clearances, but the discharging of the coal at port will allow the crew to go home after waiting for as long as seven months offshore.

"We checked with one of the shipowners and they confirmed to have received such notification abruptly," a Chinese trader said. "These cargoes are indeed to be discharged, although the reason remains unclear. "

China imposed an informal ban on Australian coal imports last October, after unloading delays worsened mid-year.

Five vessels at Jingtang port CHS Creation, Hong King, Jag Anand, Navios Coral and Ping May — a mix of Panamax and Capesize ships — will discharge a total of 567,000t, sources indicated. A total of 850,000t on eight vessels will discharge at both Caofeidian and Jingtang ports, Chinese sources said.

"It is still not known whether they will be given clearance for customs or simply discharged into a bonded warehouse in an effort to release the vessel and the crew members onboard," an Indian trader said, adding that all five vessels have been stranded since they arrived at the port between mid-June and mid-July last year.

The Indian vessel Jag Anand brought attention to health concerns for the crew members when it changed crew in Chiba, Japan, late last year before rejoining the Jingtang flotilla.

Tier-one coking coal import prices fell by $1.85/t from yesterday to $216.15/t cfr China following the news today, as any hint that China might ease its ban on Australian coal imports would free importers from limited options from Canada and the US now.

"It is still early to say now. The recent discharge likely accounts for those vessels that arrived before the informal ban, effective from October. It is worthwhile to see whether the interest to resell cargoes will reduce from here on," a Singapore-based trader said.

Others said the discharging of these vessels could be a one-off event — similar to the South Korean crew returning home late last year after unloading its coal — given the strained Australia-China relationship.

Around 3mn t of Australian coking coal is waiting to unload at the two ports or be resold to other markets. Market participants reported a significant amount of resale offers across coals in the premium low-volatile, premium mid-volatile and second-tier segments. Australian export prices will gain support if resale interest declines, as an end to the ban will pull imports into China and reduce overall supply in the market.

By Dylan Wong and Parvin Chong