Although we are in the middle of the third wave of covid-19 there is hope that the development and roll out of vaccines will enable us all to return to a semblance of normality this year. 

However, the ‘collateral damage’ – as BIMCO’s Peter Sand describes the Chinese restriction of Australian coal imports caused by their dispute over Beijing’s handling of the pandemic – continues. China, the largest buyer of coal on international markets imports is increasingly sourcing from other places such as Indonesia. BIMCO’s data shows China imported roughly 1.4 million metric tons of Australian coal in December 2020, down from 7.8 million metric tons in January 2020 with Indonesian imports increasing by slightly more in the same period.

Although there are signs the dispute is slowly easing it will take time for a return to normality. In the meantime, Australian shippers and terminals operations will continue to be hit if increased shipments to India, Vietnam and Korea do not compensate. A card in Australia’s hand is the difficulty China will have replacing coking grade coal from elsewhere, which it needs to meet surging demand from steel mills. 

If the dispute continues, the more serious long-term implication for bulk terminals and carriers is the increase in overland supply. At the moment the quantities are not that big in the scheme of things, but if the supply becomes established at competitive rates shipping and terminals will lose out. Already shipments from Mongolia were up from 2 million metric tons in January 2020 to 8 million metric tons in September.

Source OBTO News