* Indonesian exports would benefit from looser terms
* No date for implementing any changes
* Domestic producers had lobbied for restrictions
By Fayen Wong and Fergus Jensen
SHANGHAI/JAKARTA, June 4 (Reuters) - China, the world’s largest coal buyer, is considering easing a proposed ban on low-grade thermal coal imports following protests by major utilities, trade sources said.
The new standards being considered would affect a much smaller proportion of imports and ensure that more supplies from Indonesia, the world’s top steam coal exporter, would meet the minimum requirements.
“The NEA is looking at lowering the bar on calorific value, which means more imports will be able to get through,” said a source linked to a state-owned power company.
The National Energy Administration (NEA) is now looking to allow thermal coal imports with a minimum calorific value of 3,750 kcal/kg (NAR), down from the 4,540 kcal/kg limit that was previously proposed, trading and utility sources said.
The maximum sulphur content has also been raised to 2 percent from the earlier plan of one percent, trade sources said.
It was not immediately clear when a final decision on implementing the standards will be taken. Major coal miners in China said they have not been consulted on the revision.
Plans to curb coal imports came on the back of intense lobbying by Chinese coal miners, who have blamed the near 30 percent jump in overseas supplies last year for the tumble in local prices, sources said.
Expectations that the proposed ban would be relaxed has already lifted Indonesian coal prices by around $1-$1.50 a tonne through the week as more Chinese buyers returned to the market, traders said.
An earlier proposal to bar steam coal with heating value of 4,540 kcal/kg would have blocked some 55 million tonnes of coal imports, accounting roughly a fifth of total shipments based on last year’s trade data.
Traders said the revised proposal, if adopted, would only affect less than 10 percent of imports.
“If that should happen, it will have a very minimal impact on the Indonesian seaborne trading market because most of the Indonesian coal traded is above 3700 kcal/kg,” said a Chinese coal trader.
“The ban is going to affect Indonesian low CV coal and high sulphur American coal. In the short-term that’s going to place a cost burden on the power plants but this is going to be overcome by the Chinese local supply.”
The Indonesian Coal Mining Association (ICMA) said it will lobby the local government to pursue a diplomatic approach to protest against the plan.
“It is China’s right to do that, but we are trying to persuade our government to (push) through their diplomatic channels to relax their regulation,” ICMA’s executive director Supriatna Suhala told Reuters.
China imported about 290 million tonnes of coal, including lignite, last year, against total output of 3.6 billion tonnes.
Some large Chinese miners and traders remained sceptical that Beijing would introduce a ban at all, as many utilities have existing term contracts and many stakeholders are involved.
“There is the coal faction, the utilities and the large traders backed by local governments and banks. It’s difficult to justify such a move when the miners have had a decade of solid profit growth,” said a source with a mid-sized Chinese mine.
Low-grade coal became a target because it competes with a large proportion of their production.
But blocking imports of low-grade coal, which account for a meagre percentage of China’s total output, would do little to rebalance a market that is now plagued by over capacity, industry experts said.
“The main reasons for falling coal prices are weak demand from power generators and an oversupply. But most miners are unwilling to cut back on production,” said David Fang, an analyst with the China Coal and Transport Distribution Association. (Editing by William Hardy)