Source: SteelGuru
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  • A number of state-owned Chinese companies have reportedly received orders to stop using and ordering Australian coal
  • Unidentified sources which helped break the story on Monday claim major steel producers followed the orders first, and more across the country could follow
  • In addition, ports located in China have stopped offloading Australian coal altogether
  • The Australian Government is aware of the reported cease orders
  • At this stage, the timeline of events leading up to the decision remains unknown

Several state-owned Chinese companies have reportedly received orders to stop ordering and using Australian coal.

The news was confirmed on Monday afternoon, as reported by Bloomberg and SBS News.

Unidentified sources, speaking to Bloomberg, claim power stations and steel mills located across China were given verbal orders to immediately stop the use of Australian coal.

According to commodities news outlet S&P Platts, the cease orders were given on October 9. A number of ports in China have also reportedly already stopped offloading Australian coal.

The Australian Government is aware of the situation.

“[Australia] has previously faced occasional disruptions to trade flows with China,” Federal Trade Minister, Simon Birmingham, said on Monday.

“Australia will continue to highlight our standing as a reliable supplier of high-grade resources that provide mutual benefits,” he continued.

China’s customs administration was not available to comment at the time of Bloomberg’s reporting.

Of course, this poses a large problem for Australia’s profits in the exports sector.

While China is self-reliant on sourcing and burning low-quality thermal coal, it greatly depends on using Australia’s high-quality coking coal. In fact, the majority of China’s lucrative steel-makers rely on burning high-quality Australian coal.

While other countries do contribute to the resource, Australia consistently stands above others. In January this year, China imported 7.6 million tonnes, with 5.2 million of that coming from Australia.

Recent reports from the Department of Foreign Affairs and Trade Figures claim that Australian coal provides 35 per cent of China’s electricity generation.

Australia’s coal is also its second-largest export, contributing to China’s $14 billion coal market.

At this stage, the timeline of events leading up to the decision remains unknown.

Argus Media was one of the first to break the story, relaying from a source that many more steel producers across China may follow in ceasing to order from Australia.

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