China's customs administration is testing coal imports for reasons including environmental protection, a foreign ministry spokesman said on Thursday
The Dalian port in northern China. Photo: AFP
Spokesperson Geng Shuang made the comment at a regular press briefing in response to a question about a ban on imports of Australian coal.
Chinese customs are conducting risk analysis according to the law, added Geng.
Reuters earlier reported that China's northern port of Dalian had banned imports of Australian coal indefinitely.
The move appears political, with only Australian coal being targeted.
Reuters said imports from Russia and Indonesia would not be affected.
News of the ban sent the Australian dollar tumbling in late afternoon trade.
At 6pm local time, the Australian dollar had tumbled below 71 US cents, having moved above 72 US cents after stronger-than-expected jobs data earlier in the day.
The Dalian custom officers oversee imports through five harbours - Dalian, Bayuquan, Panjin, Dandong and Beiliang - into the heavily industrialised steel-making heart of China's north.
Fears of targeted action confirmed: analyst
Currently, the ban is centred on coking coal used in steel making, but the fear is it will spread to other ports and to thermal coal used in power generation.
Ahead of the ban, Australian exporters had experienced significant delays in moving coal through the Dalian ports, with the average time to process a load slipping from 25 days to 40 days since the start of the year.
Industry sources say similar delays are now occurring at other Chinese ports handling both coking and thermal coal.
Coal is now Australia's most valuable export generating $64 billion worth of income, with China consuming around a quarter of the total shipments.
CBA commodities analyst Vivek Dhar said the ban as it stands affects only a small percentage of Australia's coal exports, but the fear is the action will spread quickly.
Last year, around 7 million tonnes of Australian coal went through the Dalian ports, so the threatened 12 million tonne quota may not stifle trade in the longer term.
However, Mr Dhar said the message Chinese officials are sending is the worry.
"It has crystallised the fear that something is going on, that China is targeting Australian coal," he said.
Trade minister seeks urgent clarification
Trade Minister Simon Birmingham said he was asking Australia's ambassador in Beijing to seek clarification about the Reuters report.
He said he would work with the coal industry on matters of market access.
Mr Birmingham urged caution on the issue as he added: "It's important to reiterate... that we went through a period of some similarity late last year but when all that was done and dusted both the value and volume of our coal exports in that fourth quarter last year to China were significantly higher."
"So, yes, we can see these occasional interruptions to the smooth flow but that doesn't necessarily translate to some of the consequences that aspects of the media might seek to leap to."
Mr Fletcher said Australia was aware that other countries were also experiencing "some difficulties" with their exports, but did not specify which ones.
"The immediate step was to find out from China what is happening. They have commitments as a World Trade Organisation member and we are an important trading partner to each other and we want this relationship to be smooth and ongoing," he said.
Not political: BHP
BHP chief executive Andrew Mackenzie said while delays had been experienced in getting both metallurgical coal and thermal coal into China recently, he did not believe it was political.
Mr Mackenzie told an analyst and investor briefing earlier this week that all suppliers had been hit by delays at Chinese ports.
"There are a number of things happening in China relating to, how they plan, and moderate, if you like, imports versus their own domestic production," Mr Mackenzie said.
"I don't believe for one moment this is linked to some of the higher level issues of relationships between China and the rest of the world, and including with us."
CBA's Vivek Dhar said any displaced Australian coal shipments would eventually find a market, but at a discounted price.
Markets on edge
NAB chief market economist Ivan Colhoun said while details remain "somewhat hazy", the initial drop in Australian dollar may be an over-reaction.
"The reported ban would impact a relatively small proportion of Australia's coal exports - imports through Dalian comprise only 1.8 per cent 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 more important impacts," he said.
"Markets are speculating that the move again reflects strains in the political and trade relationship between Australia and China in recent times, such as the banning of Huawei from the 5G mobile infrastructure rollout and suggestions in the media that China may have been behind the recent cyber attack on the Australian Parliament."
However, currency markets are likely to remain on edge for some time.
"If it was the start of a more significant deterioration in the trade relationship, it could of course have more important impacts on Australian markets, trade and economic activity given China is Australia's largest trading partner, taking around 34 per cent of total exports," Mr Colhoun said.
- ABC / Reuters