Coal news and updates

China coal imports could be hit by tariff move, says resources report

Recent moves by China to place tariffs on coal do not necessarily signal a decline in overall coal use, but could reduce growth in coal imports over the remainder of the year, according to a report by Westpac and the Bureau of Resources and Energy Economics (BREE).

The China resources quarterly report found nominal gross domestic product growth in the third quarter has been the slowest since the Asian Financial Crisis, excluding the GFC period.

But China’s electricity use has continued to grow, albeit at a slower rate.

Several policies targeting coal imports were announced by Beijing during the September quarter, and while some of the policies were designed to reduce coal use and imports in heavily-populated areas, they were mostly implemented to support the struggling domestic coal sector, the report said.

“These announcements do not necessarily signal a decline in coal use, but may reduce the growth in coal imports over the remainder of the year,” the report said.

More clarity over how the restrictions will affect Chinese imports will be provided by Beijing towards the end of the year, but the general consensus is that the regulations will have a limited effect on China’s imports and is more likely to affect domestic coal, the report said.

Growth in mining investment had slowed significantly in the year to date, with coal mining and ferrous metals smelting among the weaker segments.

The principal sources of the economic slowdown have been weakness in real estate and heavy industrial investment, with firm exports and solid infrastructure spending proving partial offsets.

But the report said the Chinese economic growth is still slightly below its potential.

Lower prices for commodities have been driven largely by the increase in supply but have also been dragged lower by falling demand.

Australia’s bulk commodity export volumes have increased significantly, as the big miners bridge the falling price gap by expanding output.

To stem overproduction and halt downward pressure on prices, local Chinese governments plan to punish coal mines operating above approved capacity. Companies that exceed production limits will be fined and have their licence suspended.

Australia’s coal exports to China were up 1.3 per cent in the year to September 30, but the value of those exports declined 17 per cent to $744 million.

Source: The Australian