The Coal Trader

Coal News for Mining & Investing Professionals

China Restores Coal Tariffs in Threat to Russian Exporters

China has restored import levies on coal from the beginning of the year, a move that could threaten Russian exporters dependent on the world’s largest market for the fuel.

The tariffs were removed in May 2022 to guard against supply risks after Moscow’s invasion of Ukraine roiled global energy markets. That helped pave the way for record imports last year, which included an increased portion of Russian coal shunned by other buyers. Now, policy has shifted to protecting China’s mining companies from the consequences of a glut after domestic output also rose to an all-time high.

Russia has become the no. 2 shipper of coal to China and the long-term aim of the two countries is for annual supply to reach 100 million tons, a figure that’s likely to be hit in 2023 once December’s imports are tallied. To maintain those volumes, Russian prices will have to fall.

“No other countries can take in such large supplies,” Su Huipeng, an analyst with the China Coal Transport and Distribution Association, told a briefing last week. “It has to be exporters cutting prices and absorbing the additional tax cost.”

Russia’s monthly coal sales to China have declined since peaking at more than 10 million tons in June as its shipments have become less competitive against other origins, a dynamic that’ll only worsen as taxes are reimposed. 

Meanwhile, rivals such as Australia and top supplier Indonesia are shielded from the duties because of free trade pacts struck with Beijing. Moscow has also imposed a tax on its own overseas sales to help pay for its war. 

China’s duties for most-favored nations, including Russia, Mongolia, South Africa and the US, have returned to a rate of 6% on coal for power and heating and 3% on coking coal used by steel mills. China has an abundance of thermal coal but is generally short of the steelmaking variety, which should help limit the impact of the levies on those imports.

Coal from other countries that don’t enjoy preferential status will be taxed at 20%.