China to remove 40% export tax on metallurgical coke from Jan 1, 2013
Singapore (Platts)--17Dec2012/641 am EST/1141 GMT
China will remove the 40% duty on the export of metallurgical coke from
January 1, 2013, an announcement posted on the finance ministry's website
Coal-based coke and semi-coke, used in steelmaking, has been removed
from a list of goods attracting export duty in 2013, according to a statement
by the Customs Tariff Commission of the State Council dated December 10.
Market participants said China's coke export quotas have also been
removed at the same time, although the Ministry of Finance couldn't be
reached for comment. The Ministry of Commerce, which is also involved in
setting trade policy, declined to comment on the matter.
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Two recent buyers of coke via tenders said Monday they were considering
whether they should renegotiate contracts as there was a possibility of
cheaper offers being made after the announcement.
"Then what would happen to my spot deals?," said a Southeast Asian
end-user who bought coke recently.
Coke buyers would now seek lower prices for coke as a result of the
news, said another source at an Indian mill, adding that he would demand a
Rupees 800-900/mt ($14-16/mt) drop if he were to buy from the spot market
Domestic coke prices in India would also face downward pressure from
more competitively priced imports, he added.
Sources at Indian coke producers expressed anxiety after hearing about
the confirmation of the removal of Chinese coke tax.
"I don't know and I can't understand which direction it will go," one of
them said. "Domestic coke prices are already under tremendous pressure but I
don't know what it will become," he said, conceding that domestic coke prices
would be negatively impacted.
"There will be pricing pressure on Japanese and Colombian coke
producers," he said. "Russian producers will also have a tough time now."
Indian cokemakers "will have to give a good price rebate to remain
competitive" in view of potentially cheaper imported material, he added.
A source at a Russian coke producer said he expected prices of seaborne
coke to drop to $260-270/mt CFR India from current $288/mt levels as a
result of the duty removal.
"Tough competition will cause a drop in spot prices," he said. "There is
too much coke in the market."
Some were less sure that the policy would directly translate into
China's return as a major coke exporter.
A Beijing-based trader said the impact on both coke and coking coal
markets would be limited.
"Cost wise, China's coke is no longer competitive," he said, citing raw
materials, labor and governmental taxes. Chinese cokemakers may not
necessarily be able to undercut seaborne producers, he added.
A Polish trader also didn't think much of the policy's impact.
"I don't think it will cause a revolution," he said. "Prices in China
for coke are quite high now, so even if you reduce the taxes, they're still
A coke purchasing manager at a Chinese steelmaker said he didn't
expect any significant immediate impact.
"The export volume would still be small compared with total output in
China," he said. "There might be some impact on sentiment, but this shouldn't
actually affect China's domestic market."
China had been the world's biggest coke exporter until the introduction
of the duty in 2008, which caused volumes to plunge. The country exported 15
million mt of coke in 2007, out of the 329 million mt it produced.
In February this year, China agreed to act upon recommendations made by
the World Trade Organization's dispute settlement body, and said it would
change policies to remove barriers to export coke, including taxes and
quotas, by the end of the year.
Platts started assessing coke prices weekly on FOB North China and DDP
North China bases since July 12 this year. The assessments, representing
material with 62% CSR, were $420/mt FOB Tianjin and Yuan 1,730/mt
($277.39/mt) delivered to North China, respectively, as of Thursday.
--Helena Sheng, firstname.lastname@example.org; Edwin Yeo, email@example.com; Julien Hall, firstname.lastname@example.org; Keith Tan, email@example.com
--Edited by Jeremy Lovell, firstname.lastname@example.org