China will cut coal import tariffs to zero from 1 May 2022-31 March 2023, the Customs Tariff Commission of the State Council has announced today.
The move aims to reduce import costs as Beijing enhances efforts to strengthen energy supply security.
Tax rates on major sources of coal supplies — Australia and Indonesia — remained unchanged at zero. Arrivals of coal from other import sources — including Mongolia, Russia, Canada and the US — that were taxed mostly at 3pc, will be dropped to zero. Tariffs for other types of coal taxed at 3-6pc will be removed as well.
Market participants expect a limited impact on boosting import volumes, suggesting minimal price change. "Indonesian coal was not subjected to any import tax even before this lift and tax rates for other origins were also not a limiting factor to procurement, particularly given smaller import volumes," a major Chinese buyer said.
China's coking coal imports from January-March rose by 8.9pc on the year to 12.26mn t, Chinese customs data show. But this was driven by the continued discharge of pre-ban Australian coal. China has allowed Australian cargoes waiting off Chinese ports to discharge since last October but its unofficial ban on Australian coal imports remains in place. Imports in January-March, excluding pre-ban Australia-origin coal, registered a year-on-year decline of 8.9pc to 10.26mnt.
Market sources anticipate that Russian coal will benefit the most from this move. Arrivals from Russia, China's second-largest supplier after Mongolia last year, totalled 10.7mn t in 2021, a 60pc jump from the previous year. China has remained a major market for Russian coal since the start of Russia's military operations in Ukraine on 24 February.
Some participants argue that imports have been affected by other factors — including geopolitical tensions, logistical limitations and ongoing Covid-19-related disruptions — so reduced tax rates could have little impact on supplies. Mongolian imports in March saw a sharp decline of 55pc on the year amid heightened pandemic restrictions at the China-Mongolia border.
Argus today assessed the premium hard low-volatile coking coal price at $517.50/t cfr China, down by $7.50/t, based on low demand and a bearish steel market.
