Chinese traders handling US coal imports turn to domestic sources
Print Edition
Some Chinese coal traders handling US imports have begun sourcing future supplies domestically, people with knowledge of the matter said, as they await delivery of the last US cargoes to arrive before hefty tariffs kick in tomorrow in a deepening trade row between the world鈥檚 top two economies.
At least six cargoes of US coal were due to arrive this month, Thomson Reuters Eikon shipping data showed, but at least three were still en route or waiting off ports to unload cargo yesterday.
From today, the US will impose new tariffs on US$16 billion of goods and in retaliation, China has pledged additional tariffs on a similar amount of US imports including metals, fuel 鈥 and coal.
Shanghai Runhei International, a major domestic coal trading house, cleared its last US metallurgical coal cargo at Qinhuangdao port earlier this week, a senior manager with the trading house said. He declined to be named because he was not authorized to speak to the media.
鈥淲e have completely stopped US metallurgical coal (imports), which is popular among steel mills, in late July. There is too much uncertainty in trade,鈥 he said.
The cargos due for August arrival were mainly booked in May after Beijing first threatened to retaliate and hit coal with heavy tariffs and Chinese buyers were able to scoop up volumes at bargain prices, according to the manager.
Shanghai Runhei said it will increase purchases of domestic coking coal instead of foreign supplies to meet demand from clients 鈥 a policy that is set to gain traction.
鈥淯nless US coal producers give us a big bargain, Chinese buyers will not import US coal,鈥 said Huang Zhiqi, a coal trading consultant at Falcon Information.
China鈥檚 appetite for US coal grew this year as traders looked for alternative supplies after Australian coal prices hit six-year highs in July.
鈥淭raders have anticipated yuan depreciation and shored up imports in advance, including cargoes from the United States,鈥 Wang Fei, coal analyst at Huaan Futures, said. 鈥淭raders can easily shift their supplies to either domestic coal or Australian and Indonesian coal since US imports only count for a tiny share.鈥
State-owned utility Guangdong Yudean Group asked US coal miners to give a discount on prices after the trade dispute escalated, but was denied, a source with direct knowledge of the conversation said. The person declined to be identified because he was not authorized to speak to media.
Guangdong Yudean Group was not available for comment.
China鈥檚 domestic metallurgical coal market remained tight in August amid a continuing environmental crackdown in Shanxi Province, a major producing region.
Coking coal futures prices were up 12 percent since the start of July to 1,334 yuan (US$194.06) yesterday.
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