China needs coal to prevent power crisis - but may not remove ban on supply by Australia

China needs coal to prevent power crisis – but may not remove ban on supply by Australia

Highlights:

  • A coal shortfall is causing China’s biggest power crisis in years
  • Australia has enough coal for Beijing, the world’s second-largest economy is unlikely to remove an unofficial ban on Australian coal imports very soon, say analysts
  • Previous year, China halted buying coal from Australia after Canberra endorsed a call for an international investigation into Beijing’s handling of the Covid-19 outbreak.

China’s coal management after the ban on Australia

Due to a coal shortfall, China is experiencing its greatest power crisis in years. Analysts told reporters that while Australia has the coal Beijing requires, the world’s second-largest economy is unlikely to lift an unofficial ban on Australian coal imports very soon.

Despite recent media claims to the contrary, China is reportedly releasing limited amounts of Australian coal that has been trapped at Chinese ports for months due to the prohibition.

According to Vivek Dhar, mining and energy commodities analyst at the Commonwealth Bank of Australia, “reports that modest quantities of Australian coal were allowed to clear customs in China have raised speculation that Chinese officials will attempt to loosen the import restriction on Australian coal.”

China’s Energy Crisis

China’s power generation is mainly reliant on coal. At least 20 provinces across the country have experienced power outages of varied degrees since mid-August. This was owing to a lack of coal supplies, stricter government rules to reduce emissions, and increased manufacturing demand as the global economy recovered from epidemic lows.

Top state-owned energy businesses have reportedly been encouraged to secure supplies for the coming winter at all costs. Analysts, on the other hand, believe Beijing would not ease Australia’s import restrictions anytime soon. Instead, they forecasted that China will look to grow coal production, capture other international suppliers and drive its industries to control emissions and output.

China’s power generation is mainly reliant on coal. At least 20 provinces across the country have experienced power outages of varied degrees since mid-August. This was owing to a lack of coal supplies, stricter government rules to reduce emissions, and increased manufacturing demand as the global economy recovered from epidemic lows.

Top state-owned energy businesses have reportedly been encouraged to secure supplies for the coming winter at all costs.

How will it disturb Australia?

“China argues that these actions reflect genuine commercial concerns,” Australia stated in a statement to the World Trade Organization last week, “but there is a growing body of information that suggests China’s actions are motivated by political reasons.”

Leave a Reply

Your email address will not be published. Required fields are marked *