On December 21, China’s Tariff Commission of the State Council announced that China will reinstate a three percent import tariff on metallurgical coal as of January 1, 2024, as previously reported by SteelOrbis. The rise in the import tariff has contributed to various increases in long-term local prices of coking coal for the first three months this year in China. For instance, the long-term prices of coking coal in the first three months rose by the highest margin of RMB 200/mt ($28/mt) in many regions compared to the last three months of last year, exceeding market players’ expectations.
Safety investigations at mines and production restrictions for environmental protection purposes are regarded as factors which contributed to the decline in production at the end of last year, while the decreasing import volume of coking coal also bolstered prices.
However, after the increase in long-term prices of coking coal, which are still lower than prices in the import spot market, Chinese steelmakers may still prioritize purchases of long-term supplies. Moreover, market players think that demand ahead of the Chinese New Year holiday will likely provide support for coking coal prices as downstream users and traders will build up certain amounts of stock.