China just handed down the United States a taste of its own medicine as new reports surfaced this week indicating the decision from Chinese importers to ditch the cheap coal supply from the US in favor for domestic alternatives.
According to Reuters, the majority of coal importers in the country have now begun looking for other sources of the fuel - mostly from domestic suppliers, as the trade spat between the two major economies continue to escalate.
Citing people who claim to have knowledge on the issue, it is said that these group of traders is now waiting for the delivery of the last batch of cargoes from the US which is yet to be slapped by China with additional duties.
As specified, there are at least six US cargoes of coal slated to arrive in Chinese ports this month. The shipping data manifest cited from Thomson Reuters Eikon indicated that there are already at least three cargoes waiting to be unloaded on Wednesday.
The statement from Shanghai Runhei International (SRI), a major domestic coal trading firm based in Shanghai, specified that the company has already cleared its last US shipment of metallurgical coal cargo which arrived at Oinhuangdao port earlier this week.
An unnamed senior manager of the trading house revealed to the media that they have "completely stopped" importing US metallurgical coal supply since late July. According to the reference person, this decision from SRI is borne out of the current trade situation happening between the Asian and Western powerhouses.
"There is too much uncertainty in trade," he said, referring to the on-going trade war fought by China against the US.
SRI, however, will increase the volume of its purchases of domestic coal in order to fill in the slack left by the US coal supply, as well as the answer to the country's growing demand of the said fuel source, as pointed out in this report.
The other alternative sources that the Chinese coal industry is looking at right now may include the supply from Australia and Indonesia.
According to financial analysts, this current trend in global coal trade is happening because traders are already anticipating the eventual decline of the yuan value against the US dollar. Given this dilemma, trading houses are forced to shore up imports, including those from the US, hoping to avoid the impending Chinese tariff.
Meanwhile, trading experts are now looking into the adverse effect this situation might bring to the US. The US Energy Information Administration data revealed in 2017 than 61 percent of the country's exports were heading to Asia, particularly in China. It remains to be seen how this will play out on the US coal economy now that Beijing is already out of the picture.
