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U.S. coal cargoes heading for China as Beijing takes aim with new tariffs

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BEIJING | Thursday, Aug 9 2018 IST
At least four cargoes of U.S. coal worth $30 million are headed to China as Beijing prepares to hit imports with hefty 25-percent tariffs, threatening a niche supply of the fuel even as China's appetite for foreign coal shows no sign of abating.

The vessels, carrying a combined 335,000 tonnes of coal, are the only confirmed cargoes in transit from the United States to China, and are scheduled to land in time to avoid the new duties.

On Wednesday night, the Ministry of Commerce published its final list of U.S. items worth $16 billion in imports that will incur an additional 25-percent tariff, including coal.

The penalties will come into effect on Aug. 23 after Washington plans to start collecting duties on Chinese products of the same value. Coal was also in the draft list issued in June.

China's coal imports have soared as domestic output has flagged, while searing summer temperatures have fuelled demand from utilities. Data on Wednesday showed arrivals hit their highest in more than four years in July.

But the new duties are likely to curb exports from the United States, which ramped up shipments in 2017 as its beleaguered coal mining sector has undergone a resurgence under U.S. President Donald Trump.

The United States shipped 3.2 million tonnes of coal to China last year, up from less than 700 tonnes in 2016, making it China's seventh largest supplier, although well behind top supplier Australia with nearly 80 million tonnes.

But it takes six weeks for a cargo to travel from the United States - compared with several weeks for Indonesia and Australia - costs more to ship and U.S. coal is of a lower quality than Australian coal.

That means replacing U.S. shipments with coal from other places may not be difficult, sources said.

"In all aspects, U.S. coal does not have any advantages," said Zhang Min, coal analyst at China Sublime Information Group.

"According to our calculation, after the 25-percent tariff, U.S. coal will cost at least $30 per tonne more, which basically rules it out of the Chinese market."REUTERS YK SDR 1225

-- (Reuters) -- C-1-1-DL0386-1470696.Xml

 
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