China says coal handling delayed by environmental checks

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"The Australia-China trading relationship is exceptionally strong", Treasurer Josh Frydenberg told the Australian Broadcasting Corporation.

Shares in Australian coal miners fell on Friday amid broad weakness in the resources sector, but losses eased in afternoon trade. "But the markets there already have a lot of suppliers, and China is, geographically, much more on our doorstep".

However potentially dominating the attention of AUD investors next week will be the state of US-China trade talks, with the US now set to increases tariffs next Friday unless there is some kind of Breakthrough.

Birmingham also said that Australia's exports of coal to China in the fourth quarter of 2018 were higher in volume and value than in the same period in 2017.

Five harbours overseen by Dalian customs - Dalian, Bayuquan, Panjin, Dandong and Beiliang - will not allow Australian coal to clear through customs, said the official, however coal imports from Russian Federation and Indonesia will not be affected.

But the dollar surrendered its rebound off last night's low and was trading at US70.90¢ as markets awaited further clarification over the ban.

Chinese sources apparently revealed to S&P Global Platts as early as Wednesday this week that a meeting of Chinese port officials, held that day near Dalian port, decided that only cargoes from Indonesia and Russian Federation would be allowed into five northern ports. "Medium to long term it's also worth also considering if China's imports of coal and iron ore have peaked".

The currency showed no reaction to Reserve governor Philip Lowe's comments to the Standing Committee on Economics that downplayed risks from house price falls.

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On Thursday, Reuters reported that one of China's biggest ports, Dalian, had banned imports of Australian coal and would cap overall coal imports from all sources to the end of 2019 at 12 million tons.

No reason has been given for the ban, but a spokesman for China's foreign ministry said on Thursday that its customs administration was testing coal imports for "environmental protection".

BHP chief executive Andrew Mackenzie said while delays had been experienced in getting both metallurgical coal and thermal coal into China recently, he did not believe it was political.

Australian trade officials said they had been notified of recent industry concerns about market access.

Its rival Coles closed about 1.7 per cent higher. Just before the start of the Lunar New Year holidays, Chinese customs officials told some local authorities to start controlling shipments from Australia, without giving explicit instructions as to how or why, according to a person with knowledge of the order, who asked not be identified because they're not authorized to speak publicly. "This is not the first time that, on occasion, local ports make decisions about these matters".

Dr Lowe said Australia should look to diversify its trade relationships to emerging countries like India and Indonesia, adding coal bound for China could be redirected to other foreign buyers.

'I wouldn't jump yet to the conclusion that this is something that is directed at Australia.

"It has crystallised the fear that something is going on, that China is targeting Australian coal", he said.