Chinas National
Energy Administration (NEA) is framing a policy to curb import of low
grade thermal and coking coal by imposition of import ban to address the
problem of poor air quality in Chinese cities due to high emission
levels from power plants, as reported by proactiveinvestors.com.hk.
Unconfirmed
reports say that thermal coal with low calorific value less than
4,500kcal/kg, ash content of more than 25% and a sulphur content of more
than 1% will be banned. Chinas proposal has the potential to displace
all its lignite [imports] and more than 50% of its Indonesian thermal
coal imports, around 100 million tons.
Winners,
if implemented, would be Australian coal suppliers of high ash
Australian 5,500 kcal/kg NAR thermal coal, as Chinese importers would
likely buy more of this product and wash down its maximum 23% ash
content to blend with domestic thermal coal. Of course, the ban could
also affect Australian coal companies with projects in Indonesia as well
that fall under the net.
The
reports also point out possible ban on coking coal import with more than
12% ash content, 1.75% sulphur and more than 12% total moisture.
However, the time line for implementation is not clear as NEA is
reported to be seeking inputs from stake holders in industry. The timing
of the potential embargos introduction has not been disclosed to
Chinese market participants.
NEA is also proposing to tighten coal import procedures by setting criteria for Chinese coal importers:
1. Registered capital of more than CNY 50 million
2. Imported more than 1 million ton coal in past years
3. Must have adequate stockyards
However,
market participants are skeptical about implementation of this policy.
If implemented, while Chinese power plants running on low caloric
thermal coal would be hit hard, Indonesia would be the biggest looser
with almost 100 million tons of at stake. The limit on sulphur would
also effect US coal miners. Domestic thermal coal producers in China
have reportedly voiced their support for the proposed block on imported
lower caloric value thermal coal, as this grade competes aggressively
with a large proportion of their output which is between 4,500-5,500
Cal/kg NAR.
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