China’s extension of port construction levy relief could boost seaborne trading

China’s extension of port construction levy relief for all import and export goods, including thermal coal, till end of 2020 could stimulate coal trading activities and reduce costs for end-users, sources said last week.

State Council premier Li Keqiang announced the moves May 22 while chairing the third session of the 13th National People’s Congress. The policy could reduce cost of production faced by utilities in electricity generation so as to safeguard livelihoods, he said.

“Economic stimulus as such is beneficial for end-users as coal and electricity became more affordable,” a north China-based trader said.

“It is good news for miners and utilities as it further encouraged seasonal demand uptick,” a Beijing-based trader said.

The port construction levy for seaborne coal and Chinese domestic coal was Yuan 5.60/mt and Yuan 4/mt, excluding value-added tax, or VAT. Such fees are typically imposed to recover the cost of construction and maintenance of harbor facilities.

A south China-based trader said Chinese coal prices hike will likely cool down slightly due to the discount as well.

“Chinese domestic coal price will stabilize upon the recovery of domestic coal production after the end of Two Sessions, China’s annual parliamentary meetings,” a Beijing-based trader said.

Shipping demand

Limited impact on the shipping demand side is expected in the short term, as sizable trading businesses, which are intended to take advantage of the port construction levy relief, have been concluded before the fresh and unanticipated announcement of the extension, shipping market sources said.

“The extension of the port construction levy relief continuously help reduce the import cost of seaborne cargoes of the end receivers,” a ship-chartering source said, adding that they do not need to rush shipping schedules to make ships arrive Chinese discharge ports before July 1, 2020.
Source: Platts

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