(Yicai Global) April 29 — China is temporarily waiving the tax on coal imports starting May 1 to reduce the price imbalance between imported coal and locally produced coal. But the cut is expected to have little effect, Shanghai Securities News reported today, citing an industry analyst.
The import tax on coal will be reduced to zero from the previous most favored nation rate which was between 3% and 6%, the Ministry of Finance announced yesterday. The tax exemption will last from May 1 to March 31, 2023.
“The move is mainly to reduce import costs,” said Zhang Jianhong, senior engineer at China International Engineering Consulting Corporation. At present, the cost of foreign coking coal, even at zero tariff, is still almost 400 CNY (60 USD) more expensive per ton than the domestic equivalent.
Removing the tax between 3 and 6 percent makes almost no difference, reducing prices by only CNY 30 ($4.50) to CNY 100 per ton, Zhang added.
China imported 16.4 million tonnes of coal in March, down 39.9 percent from a year earlier, according to the General Administration of Customs. In the first quarter, imports fell 24.2% to 51.8 million tonnes.
The current high price of foreign coal is the main factor holding back imports, Zhang said. Increased imports can secure supply, induce downstream enterprises to reduce their coal consumption, and promote the modernization of the coal industry. However, until international energy prices drop, China’s coal imports are not expected to increase much.
China imports most of its coal from Indonesia. Russia is its second source while Mongolia and Canada are also suppliers.
Editor: Kim Taylor