China continued to buy large quantities of coal from the United States in March, moving it closer to meeting its obligations under the US-China trade deal and replacing Australian coal exports that were banned in October.
While only representing a fraction of Australia's pre-ban coal exports to China, the US sold about 663,000 tonnes of coal in March, more than double its exports in February, the latest Chinese customs data showed.
US coal exports to China have risen steadily from virtually nothing in October, while Australian exports of the commodity have dropped to zero in the past four months.
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American coal exports to China have reached similar levels before, although Chinese purchases have tended to be volatile over the past few years.
Despite its emissions reduction targets, China's coal imports from the US are unlikely to subside quickly given it is aiming for economic growth of "above 6 per cent" this year.
During last week's Leaders' Summit on Climate, President Xi Jinping said China would peak coal consumption in 2025, and then cut reliance on the fossil fuel as it worked towards peaking emissions before 2030 and reaching carbon neutrality by 2060.
While some climate observers said more ambitious measures were required, Chinese officials stressed the country's targets were already onerous.
In terms of the barley blockage, we have found that due to strong global demand, barley has found new home
"China certainly hopes to abandon its overreliance on fossil fuels and to meet our 2030 goals, we must address the issue of our coal-fired plants," said Su Wei, deputy Secretary-General of China's state planning agency on Thursday last week.
Imports of American coal will also help China meet its commitment to buy an additional US$52.4 billion worth of energy products from the US in 2020-21, which it made under the phase one trade deal signed in January last year.
China's imports of energy products reached 67 per cent of the year-to-date target, using Chinese figures, according to a report by Peterson Institute for International Economics released on Tuesday. Energy shipments ran at just 39 per cent of the target last year.
Canada has been another beneficiary of China's ban on Australian exports.
From the start of the crop year in August to February this year, Canadian barley exports to China from licensed grain processors rose to 2.2 million tonnes, more than doubling the previous harvest between August 2019 and July 2020, according to data from the Canadian Grain Commission.
Canadian barley exports to China hovered at about 1 million tonnes annually until they doubled in the current crop-year, which has not yet finished.
China is now the dominant importer of barley from licensed Canadian grain exporters.
At the same time, the value of Australia's unmilled barley exports to China dropped slightly from about A$590 million (US$458 million) in 2019 to about A$500 million between January and November 2020, with December data not yet provided by the country's statistics bureau. China imposed anti-dumping duties of 80.5 per cent on Australian barley last May.
But while China has substituted Australian barley with grains from Canada and other sources, Australia has also managed to find new buyers for its product, including Saudi Arabia, the second largest importer of barley for animal feed after China, and Mexico where it is used to make beer.
"In terms of the barley blockage, we have found that due to strong global demand, barley has found new homes. It has been a long time since Australia traded into Saudi Arabia, but now we are winning the lion's share of the business," said Andrew Whitelaw, commodity manager at consultancy Thomas Elder Markets.
Despite new markets in Saudi Arabia and Mexico, the Australian agriculture department expects barley exports to keep falling this year and next, due in part to declining domestic production.
More from South China Morning Post:
- China-Australia relations: Beijing blocks 'premature' move to set up WTO probe into Australian barley tariffs
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- China-Australia relations: China turns to US coal to fill void created by Australia import ban, offers trade deal boost
- Global climate summit: Xi Jinping clears the air on China's peak coal-power goal
- China coal: Australia ban continues to weigh on supply, imports down 40 per cent even as Russia moves to fill gap