China may raise the coke export tariff if coke shipments abroad continue to rise, as domestic supply remains tight, Reuters reported Wednesday, citing Huang Jingan, director general of the China Coking Industry Association.

Coal exports declined in January and February after the government raised the export tax for coke in January to 25 percent from 15 percent.

But, the export rebounded since February, and surged to 1.67 million tonnes, up 25 percent from the previous month and a 3 percent rise from a year earlier, official customs data show.

This could prompt a further hike on coke export tariff, as China, the world's top coke producer, has been trying to curb coke exports, Huang said. 

China first imposed a 5 percent export tax on coke on Nov. 1, 2006, and lifted it to 15 percent on June 1, 2007.

Exports in June and July last year pulled back on implementation of the raised export tax, but rebounded shortly after due to higher international prices, which led the Chinese government to raise the export tax to 25 percent.

Huang added that China's crude steel production will continue to see high growth levels this year, with output increasing by 40 million to 50 million tons, which will lift coke demand.

Aside from increasing iron ore prices, surging coke prices have plagued steel mills and squeezed profits. Major steel mills in China have their own coking plants or have established long-term strategic agreements with coke producers to secure supply for production.

The supply of coke has been tight this year in China, hit by tight supplies of its main input, coking coal, and by the government's effort to clean up the environment ahead of the Beijing Olympics in August.

Domestic prices have surged this year, with the average price of second-grade metallurgic coke jumped more than 60 percent this year by the end of June to nearly 3,000 yuan ($437.40) per tonne.

The average export price for top-grade metallurgic coke, which traders said does not vary greatly in price from second-grade, had hit $675 per tonne by the end of June, up 50 percent from the beginning of the year.

Some analysts have said, however, that export quotas issued by Beijing to coke producers each year should be a sufficient means to curb exports.

 

To prevent coal and power prices rising continuously, China will implement a temporary cap on the prices of coal used for power generation, the National Development and Reform Commission said in a circular Thursday.

During the period from Jun 19 to Dec 31, the ex-mine and free-on-rail prices for power station coal shouldn’t exceed the highest transaction price on Jun 19. The most recently settled price will be the highest guiding price if no transactions settled on Jun 19, the NDRC said.

The price cap will be applied to both key contracts, which is settled between coal miners and major utilities annually, and no-key contracts, it added.

Coal suppliers are required to fulfill their contracts in line with the signed quantity, quality and price. Selling coal of key contracts as spot coal is strictly prohibited. Those violators will be punished in line with relevant laws and regulations.

Coal distribution sectors are also required to follow charge standards, said the circular.