SteelOrbis Shanghai
On August 15, China's Ministry of Finance announced that the export tariff for coking coal will be raised from five percent to 10 percent while exports of other coals will be subject to a 10 percent tariff, effective as of August 20. In addition, China's coke export tariff rate will be hiked from 25 percent to 40 percent. As a result, the growth of coke exports will be curbed, boosting domestic coke supplies. However, the imposition of a 10 percent tariff rate on coal exports is not thought likely to have much impact on the relatively tight supply of domestic coal.
Since China doesn't export a large volume of coal, the tariff adjustment for coal exports will only have a limited impact on the domestic market supply. According to the figures released by Chinese customs, China's coal exports from January to July totaled 30.28 million mt, up 4.9 percent year on year. The first batch of coal export quotas released by the Ministry of Commerce this year amounted to 31.80 million mt, while the second batch has not been disclosed yet. Suppose the total export quota this year is the same as for the previous year at 53 million mt, this would mean that 22.72 million mt of coal exports are still available. Even if there were no exports in the remainder of the year, domestic supply would only increase by less than one percent, which would not have much impact on the supply and demand relationship.
In addition, China's coke export tariff rate will be hiked from 25 percent to 40 percent, higher than the previously anticipated five percent increase. This hike will effectively curb exports of coke products, alleviating the tight availability of coke supply in the domestic market. With the export tariff rate lifted to 40 percent, the average cost of exported Chinese coke will rise by $70/mt or so to $570/mt. This price increase of more than ten percent is expected to suppress international demand.