BEIJING – China will eliminate import taxes on all kinds of coal from May 1, 2022, through March 31, 2023, the finance ministry said Thursday, as Beijing seeks to assure energy security in the face of rising world prices and supply disruption fears.
China’s leaders, especially President Xi Jinping, have often talked about how important coal is in the country’s energy mix, even though the country has agreed to cut back on coal use and peak carbon emissions by 2030.
Import taxes on anthracite and coking coal, which are primarily used in steelmaking, would be eliminated (from 3% to 0%), while rates on other types of coal would be reduced from 3–6% to 0%.
In 2021, China will import 323.33 million tonnes of coal, accounting for around 8% of its total coal consumption.
However, the elimination of taxes on coal imports is expected to have minimal effect on China’s coal purchases in 2022, given domestic supply remains at record levels and seaborne prices have soared to record highs. According to some businessmen, the decision might enhance the country’s imports from Russia.
Australian thermal coal futures, which are tied to benchmark Newcastle prices, are hovering at $326 per tonne, down from a high of $440 in early March.
China’s spot coal prices are about 1,200 yuan ($181.61) per tonne, with the government capping term-contract prices at 770 yuan.
“The tariff reductions will have no effect on Indonesian coal imports, since tariff rates have been nil for years, and will also have no effect on Australian coal owing to the import prohibition,“ a Beijing-based coal dealer said.
“Then we can only estimate that it will boost Russia’s coal imports, which are now at 6% for thermal coal.”
China’s imports of Russian coal decreased 30% year on year in March, although some Chinese dealers have been soliciting inexpensive Russian cargoes in recent weeks in response to the European Union’s planned ban.
Another Chinese coal merchant said: “The issue for China at the moment is not supplied, but demand.”
(1 dollar equals 6.6075 Chinese yuan renminbi)
