Asia shares steady after Fed minutes, Aussie rallies

On Thursday, Reuters reported that China's Dalian port region would not allow Australian coal to pass through customs.

Australian shares gave up early gains, last trading 0.1 percent lower, but the Australian dollar rallied in the wake of strong full-time jobs figure.

The Dalian ports handled ~14M metric tons of coal past year, half from Australia, says Gu Meng, an analyst at Orient Futures.

"At present, customs throughout the country are accepting as normal customs declarations for imported coal, including from Australia", said Geng Shuang, spokesman for the Ministry of Foreign Affairs in China, during a press briefing. The correlation exists because the Antipodean unit is substantially underwritten by a mammoth bilateral commodity trade with China.

Australian Trade Minister, Simon Birmingham, has called the reports "unconfirmed and unsourced", and says the Australian Ambassador to Beijing is inquiring with authorities about the decision to clarify the veracity of the reports.

Birmingham explained that Chinese import quotas, combined with the testing of products for quality assurance, "may be slowing down the processing of coal in certain ports across China".

However, Mr Dhar said the message Chinese officials are sending is the worry.

Australia is the world's number one exporter of coal, while China remains its biggest trade partner, accounting for almost 30 percent of Australian sales overseas.

Australia shouldn't be taking it personally.

'We expect freight on board Australian prices, particularly for premium and second tier hard coking coals, would come under severe pressure as Australian exporters look to sell excess coal into other markets, ' Wood Mackenzie said.

The government is investigating claims China is limiting the amount of coal that can go into their ports.

He said he would work with the coal industry on matters of market access.

Prime Minister Scott Morrison denied the import restriction showed a diplomatic rift between Canberra and Beijing. While Reuters on Thursday said Dalian had banned Australian imports altogether, the people said there hasn't been an official order to that effect.

Australia is now the world's biggest exporter of Coal and Anthracite, a high-quality and high-carbon-content type of coal.

The move is not the first time China has restricted coal imports.

Total imported coking coal inventory at five major Chinese ports stood at 3.02 million tonnes as of February 22, up 180,000 tonnes from last week, according to Mysteel consultancy.

Australian Dollar traders however will be paying close attention to political developments with China.

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

On Wall Street, all three major U.S. equity indexes ended in positive territory on Wednesday after minutes from the Fed's January 29-30 meeting indicated policymakers see little risk to leaving rates alone.

"Overall, the durable goods data provide further reason to think that economic growth will soon slow to below its 2 percent potential pace, which will keep the Fed on hold throughout this year", said Andrew Hunter, senior US economist, at Capital Economics in London.

  • David Armstrong