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China cracks down on low-quality coal imports as traders report customs delays

China is ramping up controls on imports of low-quality coal due to concerns about smog and overcapacity in the world’s top coal consumer, a government official said on Wednesday, as traders report some cargoes have been delayed by customs checks.

“As long as coal meets standards, we don’t forbid imports, but we are imposing controls on low-quality coal imports,” said Zhi Shuping, head of the Administration of Quality Supervision, Inspection and Quarantine which oversees imports safety.

“If we let all kinds of coal import into domestic market, it will hit the domestic market,” Zhi said, speaking on the sidelines of the annual meeting of China’s parliament.

Sustained checks will unsettle global miners and traders who have enjoyed months of a coal buying spree by China that helped propel prices to multi-year highs, bringing the industry out of a prolonged bear market. Prices have soared to multi-year highs this week amid broader concerns about tighter supplies and robust demand.

Delays in processing imports could further constrain supply, sending domestic prices higher. That could have the effect of undermining government efforts to keep prices stable as Beijing seeks to close outdated mines, increase use of cleaner, renewable fuels and make bloated heavy industry more efficient.

Zhi’s comments come as some international traders have complained about delays running into weeks in getting some cargoes cleared through customs in China due to tougher inspections for sulphur and mercury content at ports. Last year, Zhi’s agency rejected 1.5 million tonnes of imported coal, he said – less than 1 percent of China’s total coal imports.

One official at a global merchant, speaking on condition of anonymity, said his company’s shipments into Jiangsu province took longer than usual to get customs clearance.

It’s not clear how widespread the checks are and Zhi did not say when the crackdown started. Some experts said it could be linked to the two-week annual meeting of China’s parliament, which ends on Wednesday.

Last week, a senior politician from Shanxi, one of the country’s top producing regions, proposed curbing imports of low-quality coal as a radical measure for curing China’s overcapacity problem.

Speaking on the sidelines of parliament, Wang Fu, vice governor of the province, suggested targeting coal from Indonesia, which accounted for almost 40 million tonnes, or 15 percent of total arrivals, last year.

The proposal is unlikely to get passed into law and would likely face hefty resistance from power producers, which still rely on coal. But the comment underlines the challenge of getting wary provincial governments on board to tackle excess and close inefficient operations.

Source: Reuters (Reporting by Meng Meng, Hallie Gu and Josephine Mason in BEIJING and Fergus Jensen in JAKARTA; Writing by Josephine Mason; Editing by Kenneth Maxwell)

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