China is in short supply in China and it raises the export tariff on coke coking coal

On the evening of the 15th, the Ministry of Finance announced that starting August 20, the provisional tax rate for coke exports will be raised from 25% to 40%. The temporary tax on coking coal exports will also increase, from 5% to 10%, while other bituminous coal exports will now be subject to a 10% provisional tariff. This move is part of a broader effort to regulate coal exports and stabilize domestic supply amid rising international demand. Since 2008, China has faced persistent coal shortages, but international market forces have kept export prices high. Despite annual export quotas being adjusted downward, the government has continued to use both taxation and quota controls to manage the flow of coal out of the country. Earlier this year, the provisional tax on coke exports was increased from 15% to 25%, reflecting growing concerns over domestic supply stability. In the first half of 2023, coke exports saw fluctuations, with monthly figures reaching 960,000 tons in January, 730,000 in February, 1.24 million in March, and 1.34 million in April. By June, the total had reached 1.5 million tons, marking a slight decline from earlier months. However, despite the drop in volume, the average FOB price of exported coke surged dramatically—rising from $173/ton in May 2022 to $464.83/ton, an increase of 168.69%. In June, the price hit a new record high at $498.32/ton. Jin Qiang, chairman of the China Coking Industry Association, noted that global demand for Chinese coke may slow in the second half of the year, potentially leading to slightly lower exports than in 2022. Meanwhile, the surge in international coal prices has driven up import volumes, though overall coal imports fell by 20.4% year-on-year in the first half of 2023, totaling 21.55 million tons. Despite the drop in overall coal imports, coking coal imports rose by 4.43% to 2.94 million tons, with May seeing a 50% year-on-year increase. Domestic coal exports, however, jumped significantly, reaching 25.49 million tons in the first half of the year—an increase of 10.2% compared to 2022. June alone saw exports reach 6.99 million tons, up 83% from the previous year. This shift has led to a dramatic reversal in the coal trade balance. While the first half of 2022 saw a net import of 3.95 million tons, the first half of 2023 ended with a net export of 3.94 million tons, resulting in a total difference of 7.89 million tons. This has worsened the domestic coal shortage situation. Coking coal exports also showed strong growth, increasing by 15.79% year-on-year to 1.82 million tons in the first half of the year. May’s exports soared to 694,700 tons, a 5.91 times increase from the same period last year, signaling a significant turnaround since 2004 when coking coal exports were declining. Analysts believe that the recent tax hikes are aimed at narrowing the gap between domestic and international coal prices, curbing excessive exports, and ensuring sufficient supply for key industries. By controlling the flow of coke and coking coal, the government seeks to prevent further price spikes in downstream sectors and avoid negative economic impacts.

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