China is refusing to back down over Aussie coal but how long can it last?
China may be in the grips of an energy crisis. Still, it’s determined not to back down on its black-listing of Australian coal. But for how long?
“It seems far-fetched to hope China’s energy shortage will result in China-Australia trade growth,” the Communist Party-controlled Global Times declared earlier this week.
But “unprecedented” coal prices – and a global supply shortfall – appears to have swept aside any impact the coercive trade embargo may have had.
“Unprecedented because international thermal coal prices have already increased more than 100 per cent since May this year,” says Macquarie University energy economics expert Dr Lurion De Mello. “This is not normal.”
The global economy has begun to emerge from its pandemic-imposed shutdown. This, combined with a series of extreme weather events, geopolitical issues, disruption to coal output and the stockpiling by Russia and China has triggered a dramatic fuels shortage.
Gas. Coal. Oil. All are experiencing increased demand.
And things are getting dicey.
China has been suffering extensive power cuts. Its industrial heartland has been ordered to cut back operations. Corporations must take efficiency measures. Residents are subject to surprise blackouts.
Europe is finding itself in a similar situation. Gas prices have surged. Electricity now costs more than 200 per cent more than it did in January. Soon nations there may have to choose between keeping industries producing – or keeping people warm.
The crisis may be a bonanza for coal and gas exporting countries, like Australia.
But how long will it last?
“Some believe that China may rely on coal imports to a certain extent to alleviate the power shortages that have spread to several provinces,” the Global Times reports.
It has already dipped into the 1 million tonnes of Australian coal sitting in ships ever since Chinese customs refused to accept deliveries. Even though it’s already been paid for.
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