China’s reintroduction of coal import tariffs bad news for Australian exporters

Image credit: Flickr User: Christopher Muller

China will reinstate import tariffs on coal after nearly a decade in an effort to support struggling domestic miners.

China’s reintroduction of coal import tariffs bad news for Australian exporters
Image credit: Flickr User: Christopher Muller

The world’s biggest coal importer will impose a 3% levy on anthracite and coking coal, 6% on non-coking coal, while the import tariff on Briquettes, a fuel manufactured from coal, will also be set at 6%.

China’s move to reinstate coal import tariffs – which were scrapped back in 2007 – comes after a year of intense lobbying by the country’s top mines to make Beijing put an end to the flood of cheap supplies that have overwhelmed the domestic market and dragged local prices to a six-year low.

Statistics showed that more than 70% of Chinese coal producers are failing to generate profit and over half of them are delaying or cutting wage payments, which signalled the Chinese Government that it was a time to act, says Deng Shun, an analyst at ICIS-C1 Energy in Shanghai.

“This is obviously another move to shore up the local coal industry,” Mr Shun told Bloomberg over the phone.

He said the reintroduction of the import tariff will severely impact miners in Australia, which exported about 61 million metric tonnes to China in the first eight months of this year alone.

“Australian coal will probably be worst hit, as it was China’s top coal-import source this year.”

While speculation has swirled about the resumption of the import tariffs since late last year, some industry participants were surprised by the high rates and the types of coal that were included, according to the Sydney Morning Herald.

“Having a 6% import tax for thermal coal is very high and that will easily snuff out any price advantage overseas suppliers can offer,” said a Shanghai-based coal trader.

“It is also puzzling that they have resumed tariffs for coking coal, since China has a shortage of quality coking coal.”

China, also the world’s top coal producer and consumer, imported 327.1 million tonnes of coal in 2013, accounting for about 10% of the country’s total consumption.