The China Commodities Upheaval Continues With This Stoppage

All eyes in the commodities world have been turning back to China the last several weeks. With supply dislocations across the country roiling markets for metals, energy and beyond.

Get The REITs eBook in PDF

Get our PDF study on REITs and our other investor studies! Save it to your desktop, read it on your tablet, or email to your colleagues.

And this week the upheaval continued. With one of China’s largest ports suddenly being closed to imports of a key energy fuel.


#MICUS: Value Managers Say Their Style Is Far From Over

Structured ValueNote of Chuck Bath, David Wallack, and Ramona Persaud's presentation from the 2020 Morningstar Investment Conference. Q2 2020 hedge fund letters, conferences and more Dead Again? Value Managers Say Their Style Is Far From Over For more than a decade, large value has been one of the most difficult factors to own. Moderator Linda Abu Read More

Traders in China confirmed Wednesday that Guangzhou port in southern China has been closed to coal imports. With sources saying that the facility has “stopped accepting foreign shipments”.

Observers in the space said they hadn’t been given a reason for the sudden halt. Simply noting that the import stoppage had been ordered by customs officials at the port.

That makes it appear the coal import ban is yet another policy implemented by China’s national government — possibly part of ongoing efforts to fix environmental problems across the country, including air pollution from coal-fired power plants.

If that’s the case, this represents a drastic escalation of China’s environmental efforts. With Guangzhou port having been a key coal import point up until now — being southern China’s largest coal hub, with 60 million tonnes of yearly shipping capacity.

But there is reason to believe that Beijing could take aim at such a big target. Given that the national government shut down coal imports at 150 small ports across the country, just a few weeks ago.

If the import halt at Guangzhou does indeed turn into a length affair, it will have major repercussions for global coal markets. With exporters like Australia and Indonesia losing a major source of demand.

It will also put upward pressure on China’s domestic coal prices, which have been soaring lately. Watch for indications on how long the ban will last — and for a lift in producers with land access into China, including Mongolia and Russia, if the stoppage is prolonged.

Here’s to turning off the taps,

Dave Forest

Article by Pierce Points