China cuts local orders
Chinese firms are cancelling orders for Australian coal.
Reports that China has stopped taking shipments of Australian coal appear to have been confirmed, with BHP chair Ken MacKenzie telling reporters after BHP's annual general meeting (AGM) that coal exports are being stalled.
It comes after economists at S&P Global Platts reported Chinese steel producers and Chinese power firms had been ordered to stop importing Australian coal.
Analysts say Beijing is effectively blowing a $15 billion a year hole in the Australian economy.
“China is less reliant on Australian coal imports compared with, say, iron ore, therefore we have little reason to doubt that this verbal warning could persist for an indefinite period as a potential retaliatory measure over recent political tensions,” Navigate Commodities managing director Atilla Widnell has told reporters.
Beijing has reportedly passed word of the ban verbally throughout the Chinese shipping industry, making no official announcements or statements, which could open it up to legal retaliation.
China already has a policy to go carbon neutral by 2060 and has seen a big rise in renewables.
This means that Australia would have had to face declining coal exports eventually, but the abrupt turnaround has caught the industry by surprise.