It’s been nearly two years since China issued a painful ban on one of Australia’s biggest exports, but that could be about to change.
In October it will be two long years since China decided to take a huge step to punish Australia and one of its main exports. But now there are rumors that big changes are on the way.
Beijing’s ban on Australian coal imports came at a time of great tension between the Chinese Communist Party and the then Morrison government, and it has had a negative impact on the economies of both countries.
Australian exports account for 58 percent of global trade by sea or metallurgical coal, an essential ingredient in steel production.
China, meanwhile, likes to make steel, accounting for 57 percent of world steel production in 2020.
It has not been a good move for either country.
Australia lost its largest coal customer. And for China, since the ban went into effect, every million tons of coal used in its steel mills has cost more than $400 million ($A590 million), compared to about $250 million ($A370 million) paid by steel mills in China. . other parts of the world – purely because of the Aussie ban.
However, there are rumors that China is preparing to lift its unofficial ban on Australian coal imports in August or September.
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Nothing has been confirmed yet, but Australian coal mining companies are seeing their stock prices jump with excitement at the prospect of a turnaround.
On Thursday morning’s trading, New Hope rose 7 percent, Whitehaven gained 3.9 percent and South32 rose 2.6 percent.
Experts think China may want to do this to drive the price of metallurgical coal – now about $250/ton ($370/ton) – towards the price of thermal coal – now about $430/ton ($630/ton). tons).
Shaw & Partners senior resources analyst, Peter O’Connor said: the Australian“This would be one way to remedy the price bias seen recently with the price of coal – the premium coal offering – trading thermal coal at a discount.”
Albanian sticks to China’s demands
The rumor would be a major breakthrough for Australia-China relations and a victory for the new Albanian government.
Scott Morrison’s insistence on an investigation into the origins of Covid did not go down well with Beijing and worsened an already tense relationship between the two countries.
Prime Minister Anthony Albanese and Foreign Secretary Penny Wong have said they want to repair some of the damage done over the past three years.
However, the prime minister has said he will not just give in to China’s demands to normalize trade relations.
Over the weekend, Chinese Foreign Minister Wang Yi issued Wong with a four-point list of demands to restore the relationship and
Foreign Minister Wang Yi blamed the “irresponsible” words and actions on the difficulties in the relationship between China and the previous government led by Scott Morrison.
“The root cause of the problems in bilateral relations in recent years has been the insistence of the former Australian government on China as a rival or even a threat, making its words and actions irresponsible against China,” he said.
“It is hoped that the Australian side will seize the present opportunity and take concrete actions to reform the correct understanding of China, reduce negative assets and gather positive energy for improving China-Australia relations.”
It followed a meeting in Bali on Friday between Ms Wong and Mr Wang that ended a diplomatic freeze that has been going on for three years.
Ms Wong said the meeting had been an “important first step” in “stabilizing” the relationship.
While acknowledging it was a step in the right direction, China has called on Australia to meet four criteria to better mend the relationship, including that Canberra should see Beijing as a “partner rather than a rival”.
Speaking in Canberra this week, Mr Albanese said Australia will continue to work with China where it can, but will not shy away from championing the national interest.
“Look, Australia is not responding to demands. We are acting on our own national interest,” said Mr Albanese.
‘I’ll say this. We will cooperate with China where possible. I want to build good relations with all countries. But we will stand up for Australia’s interests if we have to.”
– with Samantha Maiden