China is considering accepting some stranded Australian coal cargoes, an effort that would help ease a logjam of vessels that have stacked up off its coast for months.
The shipments that could be cleared are those that arrived before a ban on Australian coal went into effect, said a person familiar with the situation, who asked not to be identified as the discussions are private.
The deliberations are at an initial stage and any decision would need the approval of more senior Chinese leaders, the person said. The broader prohibition on Australian coal remains in place, and ideally the cargoes would be resold to buyers in other countries, the person said.
China’s customs administration didn’t immediately respond to a fax seeking comment.
The opaque nature of the Australian ban, which has never been publicly acknowledged by Beijing, makes pinpointing its start date difficult. The government was rumored to have ordered its five biggest utilities to halt Australian purchases as early as May, while in October, power stations and steel mills were told to stop using Australian coal.
In November, Beijing ordered traders to halt purchases of a raft of the country’s commodities, including coal. Relations between the two trading partners have deteriorated since Huawei Technologies Co. was barred from building Australia’s 5G network in 2018.
Most of the stranded coal is the type used to make steel, while a smaller portion is used for power generation, according to data intelligence firm Kpler. About 70 ships are waiting to discharge according to shipping data compiled by Bloomberg.
China has had to contend with record prices for both types of coal this winter. The worst winter freeze in decades has driven heating demand to an all-time high, and thrown the country’s energy markets into tumult. At the same time, China’s steel mills are churning out record quantities to feed a state-funded infrastructure boom to rescue the economy after the ravages of the pandemic.
China’s coal imports from all countries surged to record levels in December, lifting the annual total for coal above 300-million tons to its highest since 2013. In past years, Australia has been the country’s second-biggest supplier after Indonesia.
China’s authorities are also surveying the stranded carriers to identify shipowners, crew nationalities, and end users of the coal, the person said.