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Has China banned Australian coal?

Has China banned Australian coal? There may be another step in the pressure that China is exerting onto Australia.

According to the Australian Financial Review, some power plants in China have been told to stop importing Australian coal. If that’s the case then perhaps China has indeed banned Australian coal. 

It may be as simple as China wanting to support its own coal industry. But it comes at a time when China has already hit Australian barley. Australian beef and perhaps even Australian iron ore could be in the firing line. Basically, most of Australia’s main commodity exports to China is looking like it’s under pressure from the Asian superpower.

What will the share prices of Australian coal miners drop?

We’ll see this morning. There are several large coal miners on the ASX including BHP Group Ltd (ASX: BHP), Whitehaven Coal Ltd (ASX: WHC), Yancoal Australia Ltd (ASX: YAL) and New Hope Corporation Limited (ASX: NHC).

Some coal miners sell more coal to China than others, so it doesn’t affect them all the same. For example, a lot of Whitehaven’s customers are based in Japan. Places like Taiwan and India are also customers of Australian coal. Indeed many Asian countries buy Australian coal. 

It’s concerning to see that China is pressuring Australia over the coronavirus inquiry, particularly if China has entirely banned Australian coal. But in terms of what effect this might have on ASX coal miners, it’s not as much as what a ban on iron ore would do.

Coal miners are certainly priced cheaply at the moment. The coal price isn’t as high as it once was and coal usage in most countries is expected to fall over the next couple of decades.

I’m not looking to buy shares of coal miners, but brave investors who don’t mind owning coal shares may be able to make a decent return if coal prices rise.

But I’d rather invest in quality shares that don’t largely rely on a commodity price to do well.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.