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China “may have announced” a ban on Australian coal imports

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Australia is demanding answers from Beijing after reports Chinese customs authorities have been telling companies to stop importing Australian coal. 

China launched an investigation into Australian wine imports which flared the trade tensions between the two nations. 

The industry media reported that officials issued verbal warnings to companies to stop buying thermal coal from Australia.  

On Tuesday, Trade Minister Simon Birmingham said the Government had contacted through diplomatic channels overnight. 

“I have had discussion with the Australian industry and we are making approaches to Chinese authorities in relation to that speculation,” Senator Birmingham told Sky News. 

“We don’t have proof that this is occurring, but as I said, we are taking the accusations at a value where we are at least engaging with the Chinese system.” 

Senator Birmingham said there had been a pattern of disruptions to the flow of Australian coal into China in recent years. 

“But the market has been recovered as a result of a range of different factors including the application of some domestic quotas it seems in the Chinese system,” he said. 

“From Australia’s perspective, the door remains open and the invitation there for us to have the type of discussion that we should as partners in relation to our economic co-operation in this region.” 

“We are always ready to have that mature dialogue and engagement even on difficult issues on which we may not agree.” 

Prime Minister Scott Morrison was also asked about the trade tensions during his tour of Queensland. 

“They do have their own coal industry and it is not uncommon that from time to time the Chinese Government will have domestic quotas to support local production and local jobs,” Mr. Morrison said. 

“The is not a new thing.” 

“I can only assume based on our relationship and based on the discussions we have with the Chinese government that that is just part of their … process.” 

National Party Senator Matt Cavanan said Australia exported about 20 percent of its coal to China. 

“It’s a sizeable market but it’s not our biggest market,” he told Sky News, adding the largest market for thermal coal was Japan.” 

“We only actually produce about 5 percent of the world’s coal, so if China decides to buy its coal from different countries, well, those other countries will be exporting less coal and we’ll fill a market gap in those places.” 

“Obviously, we would like to see as many markets remain open in Australia.” 

Chinese Foreign Ministry spokesman Zhao Lijian said he was not aware of Chinese customs authorities telling factories to stop importing Australian coal. 

Meanwhile, WA Premier Mark McGowan used his speech at the annual Diggers and Dealers mining conference on Monday to call for Australia to retain strong relationships with its trading partners. 

He questioned whether it was in the country’s interest for it “to be reckless with trading relationships that fund the nation.” 

“It’s about acting diplomatically. We need to get on with our major trading partners, whether it’s Japan, Korea or China,” he said. 

“WA sells around $100 billion of products to China each year. We buy about $4 billion products from China.” 

“It’s a $96 billion trade surplus, I think probably unprecedented in the world.” 

“Australia needs to have a good relationship with China. It’s not beyond us Australians to do that.” 

“In these difficult and uncertain times, it’s essential to keep trade relationships strong rather tan letting them fall victims to disputes.” 

Technical Outlook 

In the daily charts of AUD/USD, the pair gained a little on Wednesday Morning in Sydney session. 

The AUD/USD pair inched up 0.08% to 0.7166. Although the AUD was little changed earlier in the session, an ongoing coal imports spat between Canberra and Beijing sparked concerned about the AUD adding to the 1.5% decline it saw during Tuesday’s session. 

Further gains from the AUD may be halted on the coming days due to the trading tensions between China and Australia and we may yet to see the pair bouncing inside the support level at 0.6995 and resistance level at 0.74129. 

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