China's imports of coal, including Australian coal, continue as normal, said Chinese Ministry of Foreign Affairs on Friday, denying a Reuters report that a Chinese port has banned Australia coal imports.
"This could be a shot across the bow".
Dr Lowe said Australia should look to diversify its trade relationships to emerging countries like India and Indonesia, adding coal bound for China could be redirected to other foreign buyers.
The Dalian port in northern China.
Oil prices were also helped by output cuts from top producers and US sanctions on the Organization of the Petroleum Exporting Countries (OPEC) members Iran and Venezuela.
Birmingham explained that Chinese import quotas, combined with the testing of products for quality assurance, "may be slowing down the processing of coal in certain ports across China".
Coal shipped from Australia to Dalian Ports accounts for about 10 per cent of Australia's exports of the commodity to China, and only two per cent of overall exports. Commerce Department said on Thursday domestic orders for non-defense capital goods excluding aircraft unexpectedly fell 0.7 per cent in December.
The news caused an immediate one percent drop in currency value for the Australian dollar and is fueling speculation that a deteriorating diplomatic relationship is the reason China has targeted Australia's second largest export.
Australian shares gave up early gains, last trading 0.1 percent lower, but the Australian dollar rallied in the wake of strong full-time jobs figure.
Mr Frydenberg said: "We can see these occasional interruptions to the smooth flow but that doesn't necessarily translate to some of the consequences that aspects of the media might seek to leap to".
"If that's all we're talking about, the blocking of a couple of months of coal exports, then that's not going to derail the Australian economy", The Australian quoted Lowe as telling a parliamentary hearing in Sydney.
Australia banned Huawei in August previous year, recently revoked the permanent residency of a Chinese billionaire over concerns that he's an agent of influence and is pressing the Chinese for access to Australian citizens and permanent residents held in prison or trapped in Xinjiang. Yancoal closed 2.8 per cent weaker, New Hope lost 3.3 per cent, Stanmore Coal was down 2 per cent and Coronado Coal was off 3 per cent. Glencore, a major coal producer, was down more than 3 per cent in London on Thursday night but BHP Billiton stock was steady.
"The latest reports crystallise fears that began in early February that China was targeting Australian coal".
Some investors linked the restrictions to China's trade war with the US.
In most cases, only verbal notification was received by the ports and steel mills that import restrictions on coal were in place. "Of course, Australian coal does not have a quality issue".
However others, including the head of the Reserve Bank of Australia, have suggested that China's concerns about its own coal industry may be behind any such halts.
Ahead of the ban, Australian exporters had experienced significant delays in moving coal through the Dalian ports, with the average time to process a load slipping from 25 days to 40 days since the start of the year.
China produces about half of the world's coal, but it relies on overseas supply for some thermal coal, which is used for power generation, and high-quality coking coal, an Australian specialty that's used to produce steel.
Resources Minister Matthew Canavan said the coal being held up in China could end up travelling to other markets such as Japan, Vietnam and South Korea.
'If it were to be the sign of a deterioration in the underlying political relationship between Australia and China that would be much more concerning'.
"I think people should be careful about leaping to conclusions about this", he said.
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