Petcoke import ban one step closer

In an announcement that is sure to send shivers through the petcoke trading community, China has announced a ban on the import of coal with sulphur levels above 3%.

The new rules, which come into force in January, will have a 3-tier structure of restrictions. Level 1 bans coastal cities from importing coal having sulphur levels above 1% and ash levels above 20%. Level 2 bans the transport of coal over 6ookms if the coal has a calorific value of less than 3940kCal/KG, or has sulphur exceeding 1% or ash at 20%.

Level 3 applies a total ban on any coal having ash at 40% and sulphur at 3%.

These moves are part of the government’s push against pollution. Analysts say that Australian coal is likely to be the hardest hit, because of slightly higher ash content.

But it seems to me that it is just a matter of time before similar rules are announced for the import of high sulphur petcoke. China imported just over 8 million tonnes of this category petcoke in 2013, and there had been rumours this time last year that a ban was imminent. At that time some entrepreneurs rushed out and bought inventory hoping to capitalise on the supposed ban. But the ban didn’t come, and in any case, imports of high sulphur petcoke have declined in 2014. Higher shipping costs, increased domestic supply and a sluggish economy have conspired to slow China’s appetite. Most imported HS petcoke comes from North America.

There has not been any announcement yet, so this is just an opinion of mine that a ban will come. While it seems likely in the current environment, regardless of the limited contribution such a ban would make to China’s pollution fight, we will watch for any future announcement on this.

(In Customs data, high sulphur petcoke is defined as any coke having sulphur levels above 3%. Such coke makes an important contribution to the supply of coke for anodes for the aluminium industry.)