India is purchasing Australian coal that has long been stranded in China. The situation also brings into light how geopolitics is unnecessarily complicating Beijing’s battle against its energy crisis.
Buyers who have made the purchases have said that the fuel is being bought at about $12 to $15 per ton. It is among the most inexpensive type relative to its quality in the market. Indian sponge iron plants and cement producers are among buyers using the supplies to meet domestic shortfalls.
This recent development shows the extent to which China-Australia relation has soured: China is fighting an energy crunch that is likely to worsen by the time winter approaches, and yet it won’t touch coal from Australia courtesy of its geopolitical squabble.
Indian companies have purchased approximately 2 million tons of thermal coal from Australia. The coal has been in warehouses at Chinese ports.
Stockpiles of fuel at the Indian coal-fired power plants that churn out about 70% of the nation’s electricity are nearing the lowest levels in four years. This has compelled Coal India Ltd., the state-owned miner, to direct supplies to domestic utilities. The decision, naturally, has reduced shipments to other kinds of consumers, including cement companies, aluminum makers, and also steel mills.
The rates for Australia’s Newcastle coal appraised as Asia’s benchmark have surged to almost a record.
The conflict between China, the world’s largest importer and consumer of coal, and Australia had stranded nearly 70 vessels and about 1,400 seafarers waiting to discharge cargoes at Chinese ports in January 2021. Most vessels either discharged the cargoes or diverted those to other destinations.