| SHANGHAI, Sept 3
SHANGHAI, Sept 3 China, the world's top coal
importer, is expected to soon put curbs on shipments of
low-quality coal, responding to calls for support from the
country's miners who are seeing widespread losses due to
oversupply and anaemic demand for the fuel.
The China National Coal Association has sent a proposal to
the government calling for imports of low-quality coal with ash
and sulphur content exceeding 15 percent and 0.6 percent,
respectively, to be halted, sources from coal producers and
power utilities said.
The National Development and Reform Commission (NDRC) and
the National Energy Administration (NEA), which are key
policy-setting organs of the Chinese government, have already
signed off on the proposal, the sources said. It still awaits
approval from China's State Council to be written as law.
The plan is set to hit Australian coal exports hardest and
block out tens of millions of thermal coal imports by year-end,
the sources said.
"The association's rationale is to try to cut total imports
by about 10 percent to restore balance in the domestic market,"
said a source with a major coal producer who has been briefed on
the association's proposal at a meeting last month.
Officials from the coal association declined to confirm
details of the proposal. The NDRC and NEA could not be reached
If the regulation is implemented, Australian and South
African coal with a heating value of 5,500 kcal/kg will be worst
hit, since their ash content hovers around 23-25 percent and
they contain sulphur of 0.8-1.0 percent, traders said.
Top steam coal exporter Indonesia, which largely ships fuel
with low heating value, sulphur and ash content, will be the
China imported about 54 million tonnes of Australian thermal
coal and another 13 million tonnes from South Africa in 2013 -
most of which would not meet the proposed restrictions on ash
and sulphur content.
"We think the document may come within days or weeks.
Beijing already hinted at restricting imports of low-grade coal
previously and is well aware of the need to take swift actions
to arrest the crisis," said an executive at a large coal firm.
The association, which represents about 1,000 coal miners in
the country, had mooted a proposal last year to bar imports of
coal with a heating value lower than 4,540 kcal/kg, sulphur
content higher than 1 percent and ash exceeding 25 percent.
The plan did not get the government's nod due to protests by
utilities, who argued that they had long-term contracts that had
to be honoured and that such a rule would jack up their costs.
But with more than two-thirds of Chinese coal miners now
deep in the red and more than half of the firms either delaying
or cutting staff salaries, the State Council is expected to soon
implement import curbs to support the highly leveraged sector.
Hit by slackening demand growth, a worsening supply glut and
Beijing's war on smog, China's benchmark thermal coal prices
have been on a downtrend since late 2011 and are now hovering
around six-year lows, at 478 yuan ($77.75) a tonne.
To help shore up prices, the country's major coal producers,
including Shenhua Group, China National Coal Group
and Datong Coal Mine Group, have cut output, with
promises to slash production by as much as 10 percent this year.
At an industry meeting on Aug. 28 attended by coal miners,
power plants and chaired by NDRC director Lian Weilian, the
commission said coal production should be cut by 200 million
tonnes in the second half of this year and urged local
governments to shut down outdated mines.
As part of Beijing's anti-pollution campaign, the NEA, in
charge of researching and drafting strategies to address China's
energy needs, is also studying plans to ban power stations from
using coal with ash and sulphur content of more than 16 percent
and 1 percent, respectively, local media reported.
(1 US dollar = 6.1480 Chinese yuan)
(Editing by Muralikumar Anantharaman)