Economy

China denies banning Australian coal, says imports continue as normal

China denies banning Australian coal, says imports continue as normal

On Friday morning, the Australian dollar was tradingmore than one percentage point down from Thursday after Reuters reported that one of China's biggest ports had banned imports of Australian coal and would cap overall coal imports for 2019.

Imports through Dalian comprise only 1.8 percent of Australia's total coal exports, but if the reported ban reflects a more significant deterioration in the trade relationship between Australia and China, then it could have a broader impact, said Ivan Colhoun, chief economist of markets at National Australia Bank, in a note on Thursday.

Australia's Minister for Trade, Simon Birmingham, said delays to exports of coal to China were caused by import quotas.

LONDON, Feb 22 (Reuters) - Global shares crept higher on Friday as signs of progress on trade offset a worsening economic outlook, while the Aussie dollar recouped some losses after China denied it had halted Australian coal imports.

"China's customs assesses the safety and quality of imported coal, analyses possible risks, and conducts corresponding examination and inspection compliant with laws and regulations", he said.

But on Friday, Frydenberg said people should not "jump to conclusions" about the reasons behind the reported ban, saying Australia's export relationship with China was based on "mutual benefit". It typically takes about five to 20 days.

CBA research analyst Vivek Dhar said although the situation was unclear, it appeared that Australian coal was being singled out. A media official at Dalian Port Group declined to comment.

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The yuan advanced after Bloomberg reported that the USA is pressing to secure a pledge from China that it will not devalue its yuan as a part of a trade deal.

"We do understand that China applies, in some areas, restrictions in relation to the volume of coal", Birmingham told reporters in Adelaide on Friday. He said Beijing was applying its rules equally to all countries and wasn't discriminating against Australia.

"We expect and would understand that the trade agreements that we have between Australia and China will continue to be consistently applied".

"China's seaborne thermal coal imports is estimated to reduce by 15 million t in 2019, taking into account the risk of wider coal import restriction". China is expected to agree to buy more United States goods as part of a deal being brokered by negotiators in Washington this week. "This is not the first time that, on occasion, local ports make decisions about these matters".

"The potential political nature of this targeted ban after a number of bilateral issues have surfaced. may be reminiscent of the impediments to Mongolia's coal exports to China after the Dalai Lama visit in 2016", USA bank Citi said on Friday in a note.

But he said the more likely factor behind the coal ban was less concerning because China was trying to reform its internal coal and steel industries, not necessarily target Australia.

China has often tweaked its coal import policies in recent years as a tool to manage its domestic market. We have to wait and see.