China to reinstate coal import duties from Jan 2024

Tax rates on major sources of coal supplies – Australia and Indonesia – will remain unchanged at zero, but under the new tariff policy the rates for different coal types from other import sources including Mongolia, Russia, Canada and the US will recover to 3-6% from zero.

For thermal coal, in particular, a 6% import tax will be levied again from next week on supplies from Russia and Mongolia, the second and fourth largest suppliers of thermal coal to China in the first 11 months of this year.

Mysteel estimates that the reimposition of import tariffs will elevate the costs of Russian 5,500 kcal/kg NAR coal and Mongolian 4,800 kcal/kg NAR coal by around Yuan 57/tonne ($8.0/t) and Yuan 27/t respectively.

More importantly, thermal coal cargoes from the two countries may become less attractive to Chinese buyers as their coal prices could rise if Russian and Mongolian miners choose to pass the additional costs down to customers, an industry insider commented.

Thermal coal imports from Russia will be at risk of declining next year, as the relatively high prices of the cargoes, compared with other-origin cargoes, could be further underscored once the import tariff is reimposed, analysts warn.

Over January-November this year, China's thermal coal imports from Russia had soared by a substantial 68% on year to reach 46.84 million tonnes and representing 17% of China's total imports of the fuel, according to data from the country's General Administration of Customs (GACC).  

Mongolia-origin thermal coal shipments to China will also likely take a hit from this new tariff rule after Mongolian shipments more than tripled on year to 14.37 million tonnes in the first 11 months this year, representing 4% of China's total intakes, the GACC statistics show.

By contrast, Indonesian and Australian cargoes may increase their market shares in China due to their lower prices and the absence of import duties.

In fact, Australian thermal coal has been gradually making inroads back into the Chinese market since China lifted its unofficial ban on Australian coal in January this year. Last month, Australian steaming coal accounted for 18.9% of China's total thermal coal imports, exceeding Russia's 12.2% share in the same month and up significantly from a 6.5% share in March this year, the GACC data indicate.

As of December 29, the price of 0.8%-sulfur Australian 5,500 kcal/kg NAR thermal coal under Mysteel's tracking had dropped to $94/t FOB Newcastle, down by $41/t from the beginning of this year.

Written by Tammy Yang, yangfangb@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com