Tougher controls on China's coal imports looming?
Source: Mysteel
May 19, 2020 17:30
Over January-April, China's total coal imports grew by 26.9% on year to total 126.7 million tonnes, as reported, a surge which quickly fuelled speculation that measures to control coal imports could be in the offing.
"The 'quota' for coal imports at our port will be strictly limited to the same level as in 2017," said a source close to the operator of a port in South China's Guangdong province. From this year, local Customs posts are preventing ports from receiving foreign coal that has been procured by domestic enterprises which are not registered within the area of the Customs posts' jurisdiction, he said.
During 2017, China imported 270.9 million tonnes of coal for all applications, yet despite subsequent efforts to curb coal imports, the volume continued to rise for the next two years, according to Customs data. The growth was contrary to Beijing's campaign to curtail carbon emissions and atmospheric pollution, and to reduce China's reliance on coal for energy generation, Mysteel Global noted.
Besides, a recent rumour that imports of Australian thermal coal will be halted nationwide has also triggered concerns among market participants, Mysteel Global understood.
According to the market chatter, domestic power plants have been ordered to cease importing Australian thermal coal, with several plants having received the notification, though it remains unclear whether other types of coal from Australia will be restricted too or coals from other countries as well.
"It can't be true," insisted an industry source in Beijing. "An explanation should be given at least – for example, some specifications don't meet the standard for things like impurities – because imported coal is much cheaper than domestic products." By cutting imports, costs for domestic end users will increase markedly, he observed.
A Shanghai-based market watcher also noted that after the jump in coal imports over the previous several months, the import 'quota' for some power plants in South China will be exhausted soon. "With no 'quota' left, Australian coal might not be the only target to be restricted," he said.
The price for Australian thermal coal has not been impacted yet, as Mysteel's assessment on 5,500 kcal/kg Australian thermal coal grew by another $4/tonne on week to $51/t CFR China, following the rise of procurement. The price had reached a four-year low in early May because of weak global demand impacted by the coronavirus pandemic, Mysteel Global noted.
Written by Sean Xie, xiepy@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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