From the AFR:
Shaun Verner, BHP’s vice-president of marketing for coal, told Fairfax Media the testing was hurting sentiment and making it “much more difficult” and slower to sell tonnes into China.
BHP has not had a cargo rejected, but Mr Verner said “our understanding is that where some cargoes have been rejected, and we have heard through the market that there have been a few, they have had to be reloaded and resold as distressed cargoes in other markets.
…”The risk of having a cargo rejected – there is no dispute resolution mechanism. And a lot of these ports don’t even have re-loading facilities … the risk that the customer bears in this situation is strong.”
…Some Australian miners suspect the new testing is designed to help prop up China’s struggling domestic coal industry.
You don’t say? When China feels enough local iron ore production has gone out of business, it will be next. It is not far into the future, either. In 2013 China produced 340 million tonnes (mt) of iron ore. In 2014 it was 311mt. This year it’s going to be around 270mt.
My own view is that China will not want to see it sink below 250mt, 200mt at the very best. Iron ore is a strategic input and the jobs matter as well so China will simply add a quality regime similar to that for coking coal. As Australia knows well in agriculture, such ‘behind the border’ protections are marvelously effective with almost no legal recourse for the blockaded.
