China’s imports of coal from Australia and Indonesia has fallen in February. Data released by the country’s customs authority showed coal sourced from Australia, excluding lignite, dropped to 5.53 million tonnes in February while those from Indonesia plunged to 1.7 million tonnes. It was a drop of 7.3 percent and 64.9 percent from a year ago, respectively.

The reason for the drop was attributed to the government’s strict implementation of preventing importers using coal with high levels of impurities. The regulation has prompted some shippers from Indonesia to cut exporting cargoes to China to avoid potential and costly delays at the ports.

The strict measures are part of an environmental campaign to cut China’s smog while supporting local coal producers. However, it has resulted in slower demand growth for coal. "If you're a shipper and you can take your coal to some other market, you ship it there," Reuters quoted Michael Elliott, global mining and metals leader at consultants EY.

Australia’s coal exporters, such as BHP Billiton, remain confident the coal they ship will meet the new regulations of China, the world's top coal user. "At this early stage of the new regulations implementation, some details relating to Chinese testing processes are still being resolved," Reuters quoted an unidentified BHP spokeswoman. Though China's testing procedures have yet to be proven it follows certified international standards, BHP Billiton said it believed the new regulations will not pose material impact to its business.

Meantime, the latest Resources and Energy Quarterly published by the Department of Industry has determined that Australia will resume its position as the world’s largest coal exporter in 2017. Although Australia’s coal exports has suffered a standstill owing to China’s slowing appetite and stricter environmental regulations, the government believed the country’s coal exports will continue to be supported by demand elsewhere in Asia.

India, for one, has been helping filling the demand gap. In 2014, its coking coal requirements jumped 18 percent to 44 million tonnes. Analysts forecast a 2.2 percent average growth annually to hit 57 million tonnes in 2020.

To report problems or to leave feedback about this article, email: e.misa@ibtimes.com.au.

RELATED STORIES