Hello, it’s IINO.
I would like to broadcast IINO san’s Logistics Radio today.
Today’s theme is about the impact of worsening relations between China and Australia on maritime markets.
Currently, the international relationship between China and Australia is deteriorating, and the flow of trade and international logistics is changing as a result.
Daily Logistics Radio by IINO san in 17th Sep. 2021
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Worsening relationship between China and Australia
In fact, the deterioration of relations between the two countries had been gradually observed since about 2017.
In 2020, Australia officially demanded China for an international investigation into the origin of the new corona virus infection, and China took countermeasures on the trade front, which was the decisive factor.
China’s trade countermeasures began with the imposition of anti-dumping duties on Australian barley, followed by high tariffs on wine, coal, lobster, timber and so on.
Let me explain a little about dumping. Dumping is the act of selling a product to another country at an unreasonably low and throwaway price, thereby destroying the market.
In order to curb dumping, importing countries can take anti-dumping duty measures and impose high tariffs on products to protect their own industries.
China’s anti-dumping duty measures
This time, China imposed additional tariffs (anti-dumping and countervailing duties) of 80% on Australian barley and 218% on wine in an attempt to keep them out of the market.
In response, Australia pointed out possible violations of WTO rules and asked China for talks, but no settlement has been reached.
Major impact on coal transport
In addition, China refused to grant permission for dry bulkers carrying Australian coal to enter its ports. Because of it, more than 70 dry bulkers were waiting for permission to enter the port and for some ships, permission was not granted for almost a year.
Until last year, China was the largest coal trading partner for Australia, but by now China has reduced its coal imports from Australia to 99%.
Instead of it, China is importing coal from Indonesia and Australia is now selling coal to India and South Korea that it used to sell to China.
Impact on Dry Bulkers’ Market
This change in trade pattern has influenced on the increase in dry bulk carrier voyage length, with the average one per a ton increasing by 6.6% year-on-year.
Currently, the Baltic Shipping Index is on the rise, and it is believed that the diplomatic relationship between China and Australia has led to an increase in demand for dry bulk carriers.
As I explained, the diplomatic status of other countries can be also a factor that affects the shipping market, so looking at it from this perspective is a good way to train yourself to read market trends.