China’s twice-revised proposal to ban some imports of lower calorific value thermal coal, predominantly from Indonesia, and some US higher-sulfur thermal coal, was close to being suspended as a pretext to being quietly dropped, according to market sources Thursday.
Reports began filtering through the Chinese coal market from traders Thursday that the government agency drafting the imports ban, the National Energy Administration, has decided to suspend its implementation of the ban, which has faced concerted opposition from Chinese power companies.
A trader at one of China’s largest five power generation companies said he had read reports about the possible suspension of the imports ban and gave his interpretation of what it might mean for the market.
“Looks like it is delayed,” said the trader, commenting on the proposed coal imports ban. The trader had not received any formal notice about whether or not the ban would be implemented, he said. ”We will be notified if the ban materializes. But if it is dropped, we may not get any formal notice,” he added.
International coal traders greeted news of the proposed ban’s possible suspension with a mixture of relief and satisfaction, and some played down its potential impact on the seaborne market in Asia.
One trader said: “I had always been skeptical that this ban will be implemented.” He added: “Any impact on imported thermal coal in China will be restricted to low CV coal anyway.”
Chinese traders said the National Energy Administration, had run into strong opposition to its plan to outlaw imports of thermal coal with a calorific value under 3,940 kcal/kg NAR, sulfur of more than 2% and ash of over 20%, from vested interests.
“Chinese utilities have a big say in the opposition to the imports ban and in the whole thermal coal market,” a Guangdong-based trader said.
In its first incarnation around May 20, the NEA’s draft regulation took aim at imports of thermal coal with a calorific value of less than 4,540 kcal/kg NAR, and sulfur of more than 1%, and ash of more than 25%, though this was quickly modified only three weeks later.
In its second form, issued in early June, the draft regulation talked of outlawing coal imports with a calorific value of 3,940 kcal/kg NAR.
Commodity analysts at Swiss investment bank UBS in a report published June 25 said they estimated the scope of the NEA’s first mooted imports ban could block 71 million mt of imported coal, or 25% of China’s total 2012 imports, while the second modified version of the ban could stop 56 million mt of coal imports, and around 19% of the Asian country’s total last year.
The bank’s report added that between 38 million and 44 million mt of Indonesian thermal coal fell within the scope of both draft versions of the imports ban, along with 8.8 million mt of high sulfur US coal and potentially 17 million mt of Vietnamese anthracite coal.
–Mike Cooper, michael.cooper@platts.com
–Reggie Le, newsdesk@platts.com
–Edited by James Leech, james.leech@platts.com