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China cuts 2015 coal export tax to 3%

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Publish time: 17th December, 2014      Source: www.cnchemicals.com
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China, the world’s largest coal producer and consumer, will lower its coal export tariff to 3% from January 1 next year, down from the present 10%, the Ministry of Finance (MOF) said in a circular on December 16.The announcement followed a MOF statement on the same day saying the government will "appropriately" reduce the tax rates on coal in line with the market conditions.The tax cut will apply to all coal varieties, including thermal and coking coal, the MOF said.However, it is still unclear whether the government will grant more miners to export coal or scrap a quota system that has been in use since 2004.Presently, only four companies, including Shenhua, China Coal, China Minmentals and Shanxi coal import and Export, are allowed to export the fuel to other countries. Other miners have to export coal under their names.Over the past few years, coal exports by Chinese miners have been far below the export quotas, due to high export tax and uncompetitive prices, making the quota system useless to exist.The move is expected to boost China’s coal exports, which slumped to 5.31 million tonnes in the first eleven months, down 23.5% year on year, showed customs data.However, industry insiders generally see slim chances for Chinese miners to regain market shares from dominant exporters like Australia and Indonesia, due to high production and transportation costs, thus providing limited support to the bloated sector.China has been levying 10% export tax on coal since August 20, 2008, after canceling export rebates since mid-September 2006, as the government gradually shifted away from encouraging to discouraging exports of fossil fuel to meet growing domestic demand.Total exports in 2013 tumbled to 7.31 million tonnes, down from 45.43 million tonnes in 2008 when the government increased export tariff to 10%. The highest exports were record at 93.85 million tonnes in 2003.China’s coal producers have been under huge pressure, hit by a supply glut and weak prices, with more than 70% the mines operating at a loss, though the market has improved slightly with growing heating demand in the Northern hemisphere winter season.China National Coal Association has been lobbying intensively the government to cut or even scrap coal export tax to help struggling miners get out of the current downturn resulting from years of expansion andlucklaster industry activities as the Chinese economy slows.