• Chinese coal traders are halting purchases of Australian coal and coking coal following significant delays in gaining clearance from Chinese customs.
• Sources say processing times had now blown out to as much as 45 days, more than double what was previously seen.
• The delays are only for coal cargoes from Australia.
• The Minerals Council of Australia says the delays could have a significant impact on Australia’s coal industry if extended for a prolonged period.

Something unusual is happening to Australian coal exports entering China.

According to Reuters, Chinese coal traders are halting purchases of Australian coal and coking coal following significant delays in gaining clearance from Chinese customs.

“We have stopped ordering coal from Australia because it is unknown how long the restriction will last,” a manager at a Shanghai-based trading company who usually buys around 400,000 tons of Australian coal every month told Reuters.

The buyer said clearance times — typically ranging from five to 20 days in the past — had now blown out to as much as 45 days, seeing buyers switch to purchases from other major suppliers.

Three other buyers confirmed that it was only cargoes from Australia, the largest seaborne supplier to China, that were impacted by the delays.

The delay in processing times for Australian coal cargoes followed separate reports in early February that some Chinese ports had verbally notified importers that Australian thermal coal and coking coal would take longer than usual to clear.

Last year, Australian winemakers — who sell around $1 billion worth of product to China annually — found their products suddenly being delayed at Chinese ports. Treasury Wine Estates, the world’s biggest listed winemaker, found its share price hammered on reports that some 800,000 cases of wine were sitting in port warehouses thanks to customs delays.

A Beijing-based coal trader confirmed to Reuters that they had received a similar notification of potential delays. None of the sources contacted by Reuters were aware of the reason why Australian cargoes were specifically being targeted.

According to the Beijing trader, the decision marks “the first time for Beijing to curb coal imports from a specific country but without a reason”.

Further up the supply chain, data from Refinitiv showed coal shipments Australia’s Newcastle port to China fell 30% in January compared to the levels of a month earlier.

The decline may partially be explained by the timing of Lunar New Year holidays in China. However, ABC news reports that the import restrictions, introduced in January in Northeastern Chinese ports, were introduced to boost domestic coal prices in China.

Tania Constable, CEO of the Minerals Council of Australia, said Australian coal producers were “deeply concerned” about the restrictions and the uncertainty of when they would be lifted.

“We believe an unofficial quota system [has been] employed since the restructure of customs and quarantine administrative arrangements in October 2018,” she said.

“It would have a significant impact on the industry if [restrictions] extend for too long.”

The news of delays in processing Australian coal imports follows a lift in geopolitical tensions between the two nations, including concerns over cyber-security and China’s growing influence in the Pacific Islands, a region that has previously had close economic and political ties to Australia and New Zealand.

Reuters has more here.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.