China to further tighten coal quality controls on 1 July
Source: www.chinamining.org Citation: EconoTimes Date: June 25, 2015
China`s move to tighten coal quality, effective 1 January 2015, led to a significant decline in China`s coal imports in Q1.
Coal imports consumed by the domestic market were limited to coal with ash content below 40% and sulphur content below 3%. Testing at ports initially took 15 days, resulting in a cargo pile-up. Due to these restrictions, China`s Q1-2015 imports from Indonesia fell 47% y/y to 19mt, the lowest for a quarter since Q1-2011.
Indonesia was China`s largest coal supplier (106mt) in 2014. China is tightening its coal quality controls further, with effect from 1 July 2015.
The stricter criteria now extend to all saleable coal - either domestically produced or imported - in the China market, with the new specifications even stricter than those enforced on 1 January.
Coal quality is likely to be tested at ports and at the point of utilization, namely at power utilities and chemical industries. We see this as a broad-based approach to ease China`s pollution woes and reduce carbon emissions, rather than an effort to further restrict coal import volumes to rebalance the domestic oversupplied market.
As such, while shipment delays are expected, China`s imports from Indonesia are not expected to decline significantly as a result of stricter coal quality control.
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