China Lifts Export Tariff for Coke, Coal

Chinese government announced on Friday it increases the export tariff for coke and coal on August 20. The tariff increases from 25% to 40% for coke and from 5% to 10% for coking coal while the government imposes 10% tariff on thermal coal. The country apparently tries to secure the domestic energy sources by reducing the export. The higher tariff could lift the international market.

Chinese coke export price is still more than FOB US$ 700 per tonne due to higher tariff, which increased from 15% to 25% in January, and higher coking coal price. Chinese shippers could seek the buyers to pay for the additional tariff cost even for existing contracts. The tariff increase could lift the price by around US$ 90 reaching US$ 800 level.

The new tariff for thermal coal is expected to lift the price from China, which is around FOB US$ 150 per tonne for Chinese market. The higher tax should lift export price of thermal and anthracite coal from China while the higher cost could impact on spot price from Australia and some price negotiation for shipping from October by Japanese power companies.

The coking coal tariff increases for the first time since Chinese government imposed 5% tariff in November 2006. Japanese steel makers expect the impact is limited when the annual contract volume is only less than 600,000 tonnes from China. However, the higher cost from China could impact on spot coking coal export from Australia and other sources.