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China Energy Crunch Forces Beijing To Buy Australian Coal

In the latest example that when blackouts are on the cards all bets are off, China has started importing Australian coal again.

The Financial Times reported, citing a ship brokering source, that China had received a handful of Australian coal cargoes to the total tune of 450,000 tons. This added to another set of shipments totaling 383,000 tons, unloaded last month, according to data from Kpler.

China stopped importing Australian coal last year amid a political row between the two countries that also saw other Australian exports to China shrink. Now, however, amid power rationing and the risk of blackouts and heating problems during the winter, coupled with limited global coal supply, the ban has been reconsidered.

“While China unambiguously needs as much coal as it can get its hands on to avert a [fourth-quarter] slowdown due to the tyranny of rolling power shortages, geo-political tensions with Australia have waylaid the most convenient source of high-calorific coal from Down Under,” one Mizuho analyst said in a note this week, as quoted by CNBC.

While it sought alternative sources of supply and found some, they came with their own challenges in terms of logistics and regulations, the CNBC report also noted, which might add to the explanation while Beijing has relaxed its grip on Australian coal.

Last month, China ordered state-owned energy companies to do whatever they must to secure energy supplies for this winter. “At all costs” was the essence of the government’s message to utilities.

The energy crunch in China is a result as much of limited supply as of its own strong economic growth that has led the global economy through a recovery from the worst of the pandemic. But now, the crunch is threatening this recovery in what could become an actual domino effect. That Beijing set stricter emission rules for its industries did not help at all, either, so it may have to rethink that as well.

By Irina Slav for Oilprice.com

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  • Lee James on October 05 2021 said:
    Freeze in the dark or breath in air you can't even see through. Some choice. We world needed to develop more clean energy a long time ago. Nothing with energy is easy anymore.

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