Rumours that China may impose higher quality standards for imported and locally traded coal could cut shipments of US coal to the country, an American executive has said.
Bloomberg News has obtained an email from Ernie Thrasher, CEO at XCoal Energy & Resources LLC, a Pennsylvania-based exporting company, in which Thrasher is reported to have said, “Many Chinese customers can consume higher-sulfur coal without polluting the environment. If the ban is implemented, it would be detrimental to higher-sulfur coal coming from the US.”
China’s government, led by new leader Xi Jinping, has vowed to tackle the country’s festering pollution crisis. The Chinese National Energy Administration (NEA) recently held a meeting with major state-owned coal producers to discuss the proposed new standards, which could mean a ban on coal with relatively low heating value and high sulfur content.
According to an initial draft obtained by Bloomberg, China may ban purchases of coal with a heating value below about 4540 kcal/kg on a net-as-received basis, sulfur content above 1% and ash above 25%. The proposed requirements for locally traded coal will be more relaxed, however, with a minimum heating value of at least 3584 kcal/kg, a maximum ash and sulfur content of 40% and 3%, respectively.
High-heating value US coal from central Appalachia has an average sulfur content of 0.96%, while low-calorific grade coal from the Powder River Basin (PRB) has an average sulfur content of 0.34%.
The US exported about 30.5 million t of metallurgical and thermal coal into the Asia-Pacific region from April 2012 to March 2013, according to the US Department of Commerce. Of this figure, Thrasher estimates the US currently exports 4 million tpa of higher-heating value and high-sulfur coal to China.
If the rumoured plans come into force, Thrasher estimates US coal exports may fall by as much as 20%.
In China however, the domestic coal industry could benefit from the move, as utilities would be forced to use more local coal supplies.
Luther Lu, an analyst at Fenwei Energy Consulting Corp. believes the ban “could reduce [Chinese coal] imports by between 60 – 70 million tpa.”
Edited from various sources by Samuel Dodson
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