China Reinstates Coal Import Tariffs to Support Domestic Miners

By Bloomberg News  Oct 9, 2014
China, the world’s biggest coal consumer and producer, will reintroduce import tariffs on the fuel in the government’s latest effort to support money-losing domestic miners.

The Finance Ministry will impose a levy of as much as 6 percent on coal, including 3 percent on anthracite and coking coal, starting Oct. 15, according to a statement published on its website today. Similar tariffs were suspended in 2007, while a tax on brown coal was resumed in August 2013.

More than 70 percent of China’s miners are unprofitable, and half are delaying or cutting wage payments after domestic power-station coal prices fell to a seven-year low amid overcapacity and sluggish demand, the China Coal Industry Association said in July. The government, which has urged the nation’s 14 largest producers to cut production by 10 percent this year, last month banned the import of lower-quality coal.

“This is obviously another move to shore up the local coal industry,” Deng Shun, an analyst at ICIS-C1 Energy in Shanghai, said by phone from Guangzhou. “Australian coal will probably be worst hit, as it was China’s top coal-import source this year.”

China imported 61 million metric tons from Australia in the first eight months of this year, about 39 percent of its total shipments excluding brown coal, customs data show. Over the same period, it purchased 21.4 million tons of anthracite and 40 million of coking coal.

Spot coal with an energy value of 5,500 kilocalories per kilogram at Qinhuangdao port, the nation’s benchmark grade, dropped to 470-480 yuan ($77-$78) a ton in the week ended Aug. 3, according to the China Coal Transport and Distribution Association. That’s the lowest level since September 2007. It was at 475-485 yuan through Sept. 28.

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