Australian dollar hammered as China bans Aussie coal

Well, don’t say we didn’t warn you. Via Reuters:

Customs at China’s northern Dalian port has banned imports of Australian coal and will cap overall coal imports for 2019 through its harbours at 12 million tonnes, an official at Dalian Port Group told Reuters on Thursday.

The indefinite ban on imports from top supplier Australia, effective since the start of February, comes as major ports elsewhere in China prolong clearing times for Australian coal to at least 40 days.

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

The ports handled about 14 million tonnes of coal last year, half of which was from Australia, said Gu Meng, analyst at Orient Futures.

The Aussie dollar was hammered around the same time:

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Australian recession prospects are firming fast.

David Llewellyn-Smith is chief strategist at the MB Fund and MB Super which is long international equities and local bonds that will benefit from a weakening Australian economy and dollar so he is definitely talking his book.

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  1. GunnamattaMEMBER

    Geez that is a big chunk of national income going out the door.

    It would have to bring forward any thought of RBA cuts

  2. There was a online news article published a week or two ago where Indonesian thermal coal exports have skyrocketed as the Chinese cut back on the more expensive Australian thermal coal. Apparently they are blending the inferior Indonesian product with better quality coal (presumably their significant Australian stockpiles). I would suggest that some of the newer supercritical coal power plants in China have been developed to a point where the same efficiency is achieved using this blended product

    • I just read that and I couldnt help but think, “which fvcking retard ever thought using polystirene as a building material was a good idea” 10 year old kids know how well and how toxic that sh1t burns. And here we have an industry using it to build houses. Seriously, when did capitalism get so fvcked up that whole industries just give up on common sense and resort to this kind of stupidity to turn a buck?

  3. We got rid of manufacturing with the help of the Fair Work Act;

    Our university degrees are becoming increasingly worthless due to the lowering of standards to allow all Chinese students to pass. Our children no longer spend time learning the 3 RRRs and older children STEM subjects;

    We’ve piled in a few million immigrants while offshoring skilled labor (IT anyone?);
    Our construction costs for infrastructure are astronomic due to the failure of all parties to address IR issues.

    Our politicians smile when they’re caught with their hands in the till – you just have to be able to stand up to the temporary noise in the dirt-seeking media. X is how much you pocket, Y is the number of days you have to stand still until the media attention span is exceeded. No-one punishes them (or of course the banksters). Meanwhile the media ignores elephants like the gas cartels, probably too difficult to explain the mechanics to their audiences.

    Meanwhile, we employ 8 times as many people (per head of population) in the public service as New Zealand.

    The only thing left that was making money outside of dirt was RE. Of course that meant our young people had to take it up the @rse. Mountains of debt with the banks and mortgage brokers creaming off a fat percentage.

    Yes, all in all a job well done. Just keep buying your Chinese-made goods in Kmart and trust our Sam Dastyari(s) to keep them friendly. OOPS! Too late! They’ve banned our coal because we objected to their mass hacking campaigns.

    Whatever you do don’t take to the streets, just like in your local abattoir, everything depends on the animals remaining compliant.

    • you forgot the bounty hunters, a growth industry
      abandoned cars at the gc airport
      and abandoned surf and boogy boards at same
      Otherwise good work

      • Ooh! If you see any PP boogs with a stringer grab me one! NMD, elemenohpee, BZ, Custom X whatevs!

  4. This hasn’t even made the news! Its all about Julie Bishop and how she’s ‘made Australia proud’.

    By galivanting around the world with her man-barbie?
    Leeching and smooching at high-class functions?

    What a lifter.

  5. Even StevenMEMBER

    The sooner we wean ourselves off China dependence, the better. Happy to see my resource share prices savaged. Go for it China. Ban it all. Short term pain but in our long term interests.

    • Nup. We’ll be brought to heel soon enough. And if not, there’s always the “student” and tourist levers to pull.

  6. They are sending a message to other countries (Canada/UK/Germany/France) who are considering banning Huawei by punishing Australia and NZ with this action. Let Huawei in or we punish you!

    • this is nothing
      its IO which is the vital commodity
      Now take BC, his royalty comes from IO the Chinese themselves mine and ship.
      too easy minimal risk

    • You should refrain from using irresponsible and hurtful language about chinas legitimate concern over melamine tainted coal.

  7. Incredible Australia balances the whole economy on a one legged chair and than blames others when we discover just how unstable our one legged chair really is.
    Seriously we’ve been setting ourselves up for failure so we have no one to blame but ourselves
    You couldn’t write fiction like this because no one would believe it, the critics would cane you unmercifully for having a totally unrealistic plot..yet here we are
    Aussie Aussie Aussie Oui Oui Oui

    On a brighter GoT note : I suspect we’ll need all that coal to keep ourselves warm because one thing is certain: Winter is coming!

    • I couldn’t agree more. The establishment in this country are indeed a bunyip aristocracy. The predictable cry from them will be that nobody could have predicted this.

  8. Chinese main bank for US/NA property investment is WELLS FARGO. Taps are off!!! US corporate debt averaging 50% BBB bond ratings–almost shite. Car loans, student loans etc. Trade wars, economic wars, financial wars all are ramping whilst Scutterman-(Scommo) puts his finger up his righteous arse and declares he can play the fiddle with one hand and the other up his arse!!!

  9. I love a good “whoocoodanode!” moment. I haven’t heard the economists yelling it yet, but I assume it will come. Never mind the fact that Australia’s ill-advised economic concentration into houses and holes created two very obvious Achilles’ Heels…

    Reduced exports of coal to China → falling AUD.

    Falling AUD → higher cost of imports → more pain for consumers who have to rely on imports since we exported our manufacturing sector overseas → retail contraction.

    Falling AUD → foreign owners of Australian RE losing equity → motivation to sell, not buy → disinflationary effect on house prices → falling AUD as foreigners roll out of Australian RE and sell subsequent AUDs.

    Falling AUD → increased cost of refinancing foreign borrowing for Megabank → higher effective rates for clients at a time when they can’t afford it and house prices are falling.

    Recession, recession, recession.

    RBA wants to cut but it can’t do it safely if Megabank is still heavily exposed to foreign financing and the AUD is falling (unless the global economy tanks conveniently about now, moreso than the Australian economy). If Megabank can’t get clear and the world economy doesn’t tank, then Plan B is for the RBA is to open up the liquidity spigots with Oz QE. If that happens then it’s:

    – government debt issuance to the moon
    – yields and rates to the floor
    – stocks to the moon (after an initial slump)
    – AUD to the dirt
    – death to the middle class

    The other option is to raise rates, which will cause a slew of defaults, leading to a bank bailout anyway.

    What a mess the RBA is in. Entirely their own fault. Can’t raise, can’t cut without something blowing up, so they just stand there, holding still, like a deer in the headlights of a Mack truck.

    • Totally agree. Nothing good comes from an increase or decrease in rates (other than political) so hold it will be. If we can’t even steady the ship at 1.5% then all is lost anyhow. There will be pain but it is necessary to hold out and push through for there to be a recovery at the other end of this cycle. Trying to prolong the cycle by kicking the can further down the road will not prevent a reckoning, only amplify the consequences.

      • Recent rhetoric out of the Fed seems to make it clear that the “emergency” measure of using the CB’s balance sheet to regulate credit conditions has now become “situation normal”. It now looks like the Fed will never actually clear its book so the RBA has some catching up to do.

        I expect the RBA to get loose with its book rather than get loose with rates so we can join the international SNAFU.

  10. From what I’ve read Liaoning province only import 8mt’s of Aussie coal, which isn’t huge. The bigger concern is that this is just the tip of the spear from our friendly northern neighbours…