The prospect of Beijing banning imports of low-calorific value thermal coal again loomed over the Chinese seaborne market as the policy was rumoured to form the centerpiece of a tough new environmental law enacted by China's parliament, said market sources Tuesday.
According to market sources in China contacted by Platts, the import ban recently received approval from the National People's Congress, China's top legislative body.
Further details of the ban may be released next week after China's May Day holidays, but initial indications are that it will target thermal coal with a calorific value of less than 3,900 kcal/kg on a net-as-received basis and sulfur of more than 2%, said sources in China.
Renewed speculation that Beijing was close to implementing a ban on low-CV and high-sulfur thermal coal surfaced Monday in Chinese trading circles, following months of government silence on the policy that first emerged in the middle of last year.
China's National People's Congress adopted a revised Environmental Protection Law on Thursday -- the first substantial change to China's environmental protection law in more than two decades -- said the council in a statement posted Friday on its official website.
"The new law says that economic and social development should be coordinated with environmental protection and encourages studies on the impact environmental quality causes on public health, urging prevention and control of pollution-related diseases," said the National People's Council in its statement.
The new environmental law is effective January 1 2015, and has "specific articles and provisions on tackling smog," said the statement in reference to air pollution.
In its first incarnation last May, China's National Energy Administration, the architect of the ban, was targeting imports of thermal coal with a calorific value of 4,540 kcal/kg NAR and coal with a sulfur and ash content of more than 1% and 25%, respectively.
This was later modified to 3,940 kcal/kg NAR for the minimum allowable calorific value for imports, and the ash threshold for coal imports was lowered to 20%.
China imported 57.5 million mt of lignite -- the category of thermal coal with the lowest calorific value -- in the 2013 calendar year and much of it was from Indonesia, according to Chinese customs statistics.
China's proposal to ban imports of lower calorific value thermal coal was officially designed to address the pressing issue of poor air quality in Chinese cities from burning fossil fuels.
Market sources said many coal-fired power stations in China are fitted with flue-gas desulfurization equipment to reduce noxious air emissions, therefore obviating the issue of burning coal with a lower sulfur and ash content.
Well-placed market sources said they had been expecting a policy response on imports of lower calorific value thermal coal for some time from China.
The country's domestic coal has been in the doldrums for many months and coastal power plants have switched to ordering imported thermal coal which has displaced domestic thermal coal.
