Ships reroute as Beijing bans wide array of Australian products

Beijing is barring an ever longer list of Australian products and commodities from entering the People’s Republic, creating significant vessel backlogs and ships rerouting to alternate market places.

Chinese ties with Australia have soured significantly all year with Canberra leading the charge to investigate the origins of the Covid-19 pandemic.

Beijing slapped an 80% tariff on barley purchases back in May. Last month it became clear Chinese mills and utilities were told to stop using Australian coal

In a dry bulk update, Braemar ACM noted yesterday: “These rumours were not officially clarified, but we did see Chinese end-users reselling shipments which had not yet arrived and cutting back further purchases for fear of cargoes being prevented from clearing customs. Many of these diverted cargoes headed to India or Vietnam, while others continue to wait outside Chinese ports.”

This week ship operators report another unofficial coking coal bans have come into effect.

Verbal notices have also been issued to traders telling them to cease purchases of Australian wine, lobster, copper, sugar, fruit and timber. The Chinese government has not issued an official statement on these product bans, but the state-run Global Times tabloid confirmed the “import suspension” in an article late Wednesday night.

State-owned and private traders have also been instructed to also cease trading of Australian wheat. In 2020-’21, China is projected to import 7.5m tons of wheat, while Australia will produce 29m tons and export some 18.5m tons.

“Although only 8% of Australia’s wheat is headed for China, it will cause further disruptions to the dry bulk shipping market,” brokers Lorentzen & Stemoco noted in an update to clients today.

One winner from the Australian coal ban has been Russia. In the first ten months of the year seaborne imports of Russian coal to China have leapt 40% year-on-year. However, Russia does not have the production capabilities to fill in for all of the potential missing Australian coal with Braemar ACM suggesting this could translate to more long-haul trade from Canada and the US, as well as a likely increase in the flow of overland coal volumes into China from Mongolia.