China to cap 2019 coal imports to help domestic producers

SOURCE: REUTERS
April 10, 2019

REUTERS

China’s government will cap coal imports this year at 2018 levels, four sources with direct knowledge of the matter told Reuters on Tuesday, to support domestic producers.


The world’s biggest coal consumer imported 281.23 million tonnes of coal in 2018 including thermal coal, coking coal and anthracite.


However, domestic output has also increased, and is set to rise by an extra 100 million tonnes this year, said an official on Tuesday.


Three of the sources were told by provincial-level customs officials to restrict their imports in 2019 to no more than 2018 levels. A fourth source, an official with a government-affiliated body who was familiar with the import policy, said the decision was made by China’s State Council.


The cap comes as shipments from top supplier Australia have already slowed sharply due to lengthy checks at customs.


“Mining companies and provincial governments voiced their opposition against more imports,” said the official, who declined to be identified because of the sensitivity of the matter.


“I was summoned to a meeting organised by customs last month and warned to “control the purchase pace of imported coal”,” said a purchase manager at a large steel mill in the eastern province of Jiangsu.


He added that customs plans to break down the 2019 annual quota into monthly volumes.


A purchase manager at another steel mill in Shandong province was also instructed to restrict imports this year.


There was no immediate reply to a request for comment from China’s General Administration of Customs sent by fax after working hours. The State Council also did not immediately reply to a request for comment sent by fax after working hours.


However, the cap is unlikely to curb the recent price increases for coal caused by the lengthy customs delays on imports in recent months as well as safety checks in China following mining accidents.


The most-active coal contract on the Zhengzhou Commodity Exchange closed at 617.2 yuan ($91.99) per tonne on Tuesday, after rising to its highest in five months on Monday.


Spot prices for coal with a heat content of 5,500 kilocalories on Tuesday were at 629 yuan a tonne, well above the 570 yuan a tonne recommended by the state planner.


“The increase in domestic supplies are not able to cool prices,” said the official.


China barely allowed any coal imports in December last year, delaying customs clearances in order to meet a 2018 import quota restricting shipments to 2017 levels.


However, total imports rose above the 270.9 million tonnes of coal imported in 2017.



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