China's import coal import tax touched by nerves

Recently, in order to ease the difficult situation of its coal industry, China has decided to impose import duties on coal, which will cause huge losses to coal-producing countries such as South Africa and Australia.

China is the world's largest importer and consumer of coal. More than 70% of China's domestic coal producers are at a loss. This year, the price of Chinese thermal coal has fallen by 24%, while cheap imported coal has exacerbated the operational difficulties of the Chinese coal industry.

Recently, Lou Jiwei, Minister of Finance of China pointed out that the Chinese government will impose a 3% to 6% import tax on some imported coal.

Reuters pointed out that from January to July this year, China imported nearly 54 million tons of thermal coal from Australia and 13 million tons of coal from South Africa.

"Import duties have made Chinese domestic coal companies have room to raise prices in the coming months," said mining industry researcher Sibonginkosi Nyanga.

Xavier Prevost, a coal analyst at XMP Consulting, said that he believes that the Chinese government's import tax may make China's coal imports significantly reduced. “In the future, the amount of coal we export to China will be reduced, which will have a negative impact on the entire industry. How long will this effect last? I don’t know, maybe it is permanent.”

Earlier, China pointed out that from next year, it will ban the import and sale of coal with high ash and high* content in order to solve the air pollution problem.

Martyn Davies, chief executive of the South African think-tank "Foreign Advisory", pointed out that China's gross domestic product (GDP) has fallen. In addition, the government has shifted the focus of attention from the number of economic growth to the quality of growth, making the Chinese government put forward a timetable for solving environmental problems.

“The long-term trend is to reduce the demand for coal, which currently accounts for more than 90% of the energy needs of the coal country. This will bring more regulations and the central government’s control over the coal industry, including prohibiting low-quality coal from entering the market. This will have a negative impact on China's coal import country, Davies said.

On October 24, shares of some coal companies in South Africa fell, with South Africa's Exxaro Resources falling 2.13% to R$123.86 and BHPBiliton falling 3.39% to Rmb287.02.

In contrast, China's coal company stocks rose. Datong Coal rose 3.33% to 7.75 yuan per share, and Yanzhou Coal rose 0.45% to 8.92 yuan per share.

The imposition of import duties will increase the price of imported coal by 20 yuan per ton, further narrowing the price gap with domestically produced coal in China. In addition, the Chinese government plans to ban the sale and import of high ash coal.