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    Report: Major Chinese Port Bans Australian Coal Imports, Sets Quotas

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    Chinese customs officials have halted the clearance of coking coal from Australia at the port of Dalian, along with several other harbours in the country's north-east, amid mounting political tensions between the two nations.

    Kristian Rouz — The port of Dalian in north-east China has halted all imports of coal from Australia, a new report from Reuters claims, signalling a new round of escalation in the on-going coal tensions between Beijing and Canberra.

    Officials at the customs control office in Dalian have reportedly banished Australian coal imports for an unknown period of time. Additionally, customs officials said they have capped the imports of coal from Australia at 12 mln tonnes for 2019.

    The Dalian Port Group said coal shipments from Australia will not be accepted in several havens, including Dalian, Bayuquan, Panjin, Dandong and Beiliang. For their part, customs officials also said Dalian had imported some 13 mln tonnes of Australian coal back in 2017, and they wish for imports to remain at that level.

    Australian officials have said they don't know the exact reasons behind China's decision, and Chinese officials have provided little clarity on the matter so far.  Sino-Australian relations have worsened over the past few months, but few experts believed Beijing would actually target bilateral trade over political tensions.

    "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," Andrew Mackenzie of Melbourne-based BHP Group said.

    READ MORE: N Korea Resumes Regular Flights to China's Dalian After 12-Year Hiatus — Reports

    Dalian, formerly a Russian colony known as Dalniy, is a major port in China's north-east that serves an industrial region known as the 'Chinese Rust Belt'. While the exact reasons behind customs' decision remains unknown, there is widespread speculation on the matter.

    One possible explanation is that China is trying to limit air-pollution in its industrial regions. Limiting imports of Australian coal would drive up the prices of fuel in the entire region of Liaoning, and, therefore, incentivise the use of the clean coal technology by local manufacturers.

    However, there is a likelier probability that China is upping the ante in its on-going feud with Australia. The latter is a major exporter of coal throughout South-East Asia — which is currently experiencing a major industrial boom.

    "China is sending a warning sign to Australia amid the two countries' deteriorating relations since last year," Feng Dongbin of the China Coal Resource said. "Overall, China is still determined to control imports this year, but this time it starts with Australia."

    According to the China Coal Transport & Distribution Association, Beijing has ordered a delay in customs clearance of all Australian coal imports across the country, particularly, in the northern regions. The decision was reportedly taken earlier this week, and the Dalian conundrum comes in the wake of those reports.

    The Association said Beijing's decision could be aimed at hurting Australia's mining industry, which relies on Chinese coal consumption as one of its main sources of revenue. This as China and Australia have been involved in a political and diplomatic dispute for several months, related to Canberra's allegations.They include cyber-attacks and the promotion of communist indoctrination in some Australian institutions.

    But some Chinese officials say trading restrictions could have a negative impact on local industries.

    "It is hard to find a replacement for Australian coking coal since its sulphur content is very low," an anonymous official in Hebei province told Reuters.

    READ MORE: Cast Away: US Shipment of Soybeans Finally Arrives in China, Trade War to Blame

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    Coal prices in China rose in the wake of reports, with coking coal futures on the Dalian Commodity Exchange having jumped 3.6 percent Thursday. A tonne of coal from Australia costs some $30 in the region, which is cheaper than-locally produced fuel. Meanwhile, the quality of Australian coal is higher, analysts say.

    However, the majority of Chinese officials don't believe the restrictions on Australian coal would significantly affect local manufacturers — some of whom are facing seasonal air-pollution quotas this month and next, and have had to limit their throughput capacity.

    "The impact on China will be muted," Zhao Chaoyue of Sinowealth Capital Co. said. "When inventories are depleted, there may be some supply tightness as political underpinnings suggest the curbs won't be resolved soon."

    Last year, China imported a total of 28.26 mln tonnes of coal from Australia, which represented some 43.5 percent of the nation's overall imports of that commodity.

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