On April 28, China’s Ministry of Finance stated that, “in order to strengthen the guarantee of energy supply and promote high-quality development”, the import tax rate for all kinds of coal will be reduced to zero for the period from May 1, 2022 to March 31, 2023.
The current import duty on coking coal and anthracite is three percent (it has been applied since 2014), while for other types of coal the import tax is up to six percent.
The move “will likely stimulate low-cost coal imports and exert a positive impact on the steel market,” a Chinese trader told SteelOrbis. As ex-Australia coking coal imports in China are banned now, the lower import tax will mainly impact supply from Russia, which is already the cheapest, though it will also put pressure on prices of coal of other origins, like North America. Coking coal from Russia has already been discounted due to the sanctions imposed by the Western world due to Russia’s invasion of Ukraine, and the price for Russian coal is expected to go down further in the new conditions, while demand from Chinese customers is expected to increase. The gap between prices for premium hard coking coal from North America and ex-Russia K10 coking coal in China has reached $200-205/mt, according to SteelOrbis’ information. Offers for the former have been reported at up to $530/mt CFR.
Zero duty will be implemented on coal with HS codes 27011100, 27011210, 27011290, 27011900 and 27012000.