The precise scope of China's proposed ban on the importation of lower calorific value thermal coal has become clearer after Platts was given sight of a copy of the relevant draft regulation and has been able to publish its contents for concerned market participants.
The draft regulation, originally in Chinese, was published by China's National Energy Administration -- a government body that frames energy policy in the country -- and was circulated earlier this month to market participants in China for comment.
Translated by Platts into English, the draft regulation says the NEA is proposing that to enter China, imports of thermal coal should have a calorific value of at least 4,540 kcal/kg on a net-as-received basis, a maximum sulfur content of 1%, and a maximum limit for ash of 25% on an as-received basis, but does not include any detail on specifications for total moisture.
The proposed ban would be temporary in nature, says the NEA document without giving any more details.
Clarification on the exact details of the proposed imports ban has been sought from Platts by a number of market sources.
They wanted to know if the limits on ash and sulfur were framed on an as-received or air-dried basis as this could seriously affect their business contracts.
The NEA's draft regulation also states that minimum limits should apply to domestic brown coal, or lignite, produced in China, with the minimum acceptable level for this product being 2,870 kcal/kg NAR, maximum sulfur of 3%, a maximum ash content of 40%, and a total moisture content of 40% on an as-received basis.
Other domestic, non-lignite thermal coal should have a minimum calorific value of 3,585 kcal/kg NAR, a maximum sulfur content of 3%, a maximum ash content of 40%, and maximum total moisture of 40% -- on an as-received basis.
In addition, domestically-produced metallurgical coal should have a maximum ash content of 12%, a maximum total moisture content of 12%, and a maximum sulfur content of 1.75% -- on an as-received basis, the NEA document said.
The draft regulation issued by the NEA does not specify any implementation date for its proposals, including the imports ban on low-CV thermal coal.
According to market sources, it is usual practice for the NEA to give a certain grace period before its regulations are implemented, so as to allow Chinese coal buyers with supply contracts for imported coal and their overseas suppliers time to adjust to the changed requirements.
The NEA said separately, in an explanation of the reasons for its draft regulation setting out its proposed ban on imports of low calorific value thermal coal, that this measure was intended to better regulate the production and distribution of coal products in China.
Another reason given by the NEA for its regulation was that it wanted to improve the utilization of cleaner coal products in China, although the agency does not specifically mention environmental protection as a goal.
Persistent smoggy weather in northern China has been considered by a significant number of market sources in China as a major underlying reason for the regulation's drafting.
