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After being loaded with coal, DZ Weihai slipped into the turquoise waters off the coast of Australia this month and began a 14-day voyage to the Chinese port of Yangpu. How long does the ship wait to unload its cargo on arrival?
Despite China’s ban on importing coal from Australia, which leaves about 70 ships, 1,400 sailors and 6.4 million tonnes of fuel in the marine limbs, some ships continue to make the trip. While the cargoes and crew stranded are caught between authorities not letting them unload and buyers not letting them go, perhaps the most curious of all is what is driving additional shipments.
The ships DZ Weihai and Jin Lang were heading to China.
While mundane issues such as contractual commitments play a role, traders are likely to be motivated by a mix of hope and money. China is considering accepting the charges that came before the ban could increase restrictions of optimism. If they succeed, advantages are expected as the gap between Chinese and Australian coal prices has widened to a record.
“Chinese buyers with stranded loads are reluctant to resell them because the cost of those loads is much lower than domestic prices,” said Rory Simington, chief analyst at Wood Mackenzie Ltd. “Even if the charges were not released for another six months, the cost, including statistics, would still be well below current national prices.”
A single load of 100,000 tonnes of Australian coking coal would cost a trader approximately $ 14 million, based on shipping prices, not including shipping costs. The same amount purchased on the domestic market would be approximately $ 28 million. The cost of not unloading a bulk carrier, known as the stagnation rate, ranges from $ 13,000 to $ 17,000 a day.
Beijing has never publicly acknowledged the Australian ban, making it difficult to pinpoint the start date. Chinese power plants and steel mills were verbally told to stop using fuel in mid-October. Authorities also ordered traders to stop shopping for a pond of the country’s commodities, including coal, from 6 November.
The Chinese customs administration did not immediately respond to a fax seeking comments.
Since Oct. 15, 20 ships have loaded coal into Australia and have designated destinations in China, including DZ Weihai this month, according to shipping data collected by Bloomberg. Some of them, such as the Rixta Oldendorff, were diverted to other countries halfway. But at least 11 have joined the larger flotilla and are waiting outside Chinese ports to unload.
Of course, China’s ban on Australian coal has drastically changed global commodity flows: mainland buyers ordered several loads of South African coal in December and have boosted imports from Indonesia and Russia. The value of Chinese coal purchases in Australia it fell 16% last year to $ 7.9 billion.
He was left hanging
Approximately 6.4 million tonnes of Australian coal remain off the Chinese coast
Source: Kpler
Still, China is considering accepting some Australian coal loads that arrived before the import ban went into effect, a person familiar with the situation said this month. Deliberations are at an early stage and any decision would need the approval of senior leaders. The broader ban on Australian coal remains in place and ideally the charges would be resold to buyers in other countries, the person said.
“It’s interesting to see new coal deals being made recently, although there’s no clear sign that China’s ban on Australian imports will be lifted soon,” said Monica Zhu, a dry bulk analyst. of Kpler. “They are individual business activities and may not represent the primary market.”
– With the assistance of Dan Murtaugh, Matt Turner, Winnie Zhu and Serene Cheong