Dozens of vessels carrying Australian coal continue to be in limbo off the coast of China as restrictions on imports are introduced at key ports across the country.
Beijing imposed import restrictions in January, primarily in the north-east of the country, to boost domestic coal prices with no indication of when they might be lifted.
Tania Constable, CEO of the Minerals Council of Australia, said companies were "deeply concerned" about the restrictions and the uncertainty of when they would be lifted. "We believe an unofficial quota system [has been] employed since the restructure of customs and quarantine administrative arrangements in October 2018," she said. "It would have a significant impact on the industry if [restrictions] extend for too long."
How did it start ?
In 2016, the Chinese government restricted coal miners' working days from 330 to 276 days per year. This was seen as an attempt to cut back on domestic production of low-grade brown coal and improve the environment and air quality. Subsequently, imports of higher-grade coal increased, as did the price of coal worldwide.But by year's end, the working day restrictions had eased and Beijing began to re-exert control over its domestic mining sector.
Vivek Dhar, a commodities analyst at Commonwealth Bank, said it was during this time Beijing began turning the tap on and off to imports of Australian coal.
"[Chinese] policy on coal has very dramatically shifted over the last three to four years, but particularly over the last year [as] import restrictions have been fiddled with," he said. "Mid-November is where we saw the most aggressive push towards a policy of capping coal import levels and that was probably the most prominent move, similar to this, we've seen."
How long will it last ?
Beijing indicated last year its goal to keep 2018 imports at 2017 levels. This was not achieved, but led to a steep drop in coal imports in December before surging in January to the highest level in five years, according to figures released by China's General Administration of Customs.
The latest round of restrictions was imposed about a week before the Lunar New Year celebrations, a national holiday for China, which added to the uncertainty.
"There's still a lot of confusion," Mr Dhar said. "Given the holiday period, it's very difficult to know exactly what's causing this issue and finding the right people to contact."
In the meantime, the thermal coal price at Newcastle port, which accounts for 25 per cent of Australia's thermal coal, is down to its lowest point since May 2018
What is the impact ?
China is heavily reliant upon Australian coking coal, which accounts for approximately 75 per cent of the coal used in Chinese steel production. But concerns over slowing growth saw steel production in the country slow towards the end of 2018 as profitability collapsed.
Ms Constable said talks were ongoing with the Chinese embassy in Canberra and stressed the negative impact restrictions would have on the industry if allowed to continue. "The longer these sorts of delays go on, of course it does have an effect overall on production and that has a flow-on effect to other parts of business," she said. "A lot of discussion is occurring with customers in China and with the traders themselves, and plans are being made to try and get to the bottom of it."
Some reports said restrictions would ease in a few weeks, others said a few months.
Ultimately, only time will tell.