Beijing Fuhua is a consultant for the steel industry. It said in a new research report that the ban on Australian coking coal has led to a sharp rise in coking coal prices in China, but there are “clear signs of thawing in the relationship between the two countries.” 

Chinese analysts expect Australian coking coal would be allowed to re-enter the Chinese market ahead of the upcoming 50th anniversary of diplomatic relations between China and Australia in December.

“Bloomberg” also revealed that China is worried that the Russian-Ukrainian war will affect China’s coal supply. And besides the recent easing of the Sino-Australian relationship following the foreign affairs meeting of the two countries on G20 earlier this month, Chinese officials took the chance to submit a proposal to cancel the Australian coal import ban to senior leaders. They are trying to avoid repeating last year’s power supply interruption. 

China’s GDP grew by only 0.4% in the second quarter, with Shanghai hitting the worst, possibly by its lockdown policy. The 5.5% growth target that Chinese leader Xi Jinping set for the whole year seems impossible to achieve. 

Heavy industry ranks first among the many industries that contribute greatly to China’s economic growth, but it is being hit hard by rising commodity prices. China is considering terminating its two-year-old import ban on Australian coal to help save the sagging economy and struggling companies in the field.

China used to be a major consumer of Australia’s coal. It imposed an unofficial ban in late 2020 following the rising hostility over a decision to bar Chinese state-backed Huawei from building a 5G network in the country. The strain increased even further after then-Prime Minister Scott Morrison led an international call to conduct an independent probe into the origins of the coronavirus .

Before the final ban on coal, Beijing imposed curbs on various Australian imports, from coal to wine, and from beef to lobster. The ban on coal, however, has impacted and hurt China the most, it has caused a serious energy shortage due to the lack of fuel from the world’s second-largest exporter.

Without a source of cheap, high-quality Australian coking coal, victimized Chinese steel mills had to spend more to buy from other sources like the U.S., Canada and Russia. And overall, the whole Chinese steel industry suffered.

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