Coal in the crossfire: Chinese traders wary of being burnt by trade war

Updated June 22, 2018, 10:40 PM

https://business.mb.com.ph/2018/06/22/coal-in-the-crossfire-chinese-traders-wary-of-being-burnt-by-trade-war/

BEIJING (Reuters) – At least three US coal shipments on their way to China may end up casualties of the escalating trade dispute after Beijing said it would impose steep tariffs that may kick in before the ships reach their destinations.

The coal bulk ships West Trader, Navios Taurus and Partnership are seen en route to China in this illustration photo of an Eikon ship-tracking screen June 21, 2018. (Reuters)

The addition of coal to the list of more than 650 items facing higher tariffs came as a shock to Chinese steel mills and trading firms that just last month were encouraged by Beijing to buy more US coal to narrow the trade gap, four sources with knowledge of the plan said.

Although 545 items on the list face higher tariffs starting July 6, Beijing did not specify when coal and the other remaining items would be hit.

But coal’s presence on the list has sent shudders through the market.

“I am really worried. I haven’t found buyers interested in these cargoes now,” said the manager of Shanghai Runhe International Trade Co, which has three shipments of US coking coal en route to China.

He said Runhe had paid for the coal up front rather than using letters of credit from banks.
“Who knows what Trump is going to do next? In the worst scenario, we lost some money,” he added. He declined to be named because of company policy.

A cargo of US coking coal, depending on the size of the vessel, can be worth $10 million to $30 million.

From late 2014 until January 2017, China bought no coal from the United States, as it typically costs more, takes longer to arrive and is of lower quality than Australian coal.