China has announced it will cease the import and local sale of low-grade thermal coal, which is primarily used for heating and power generation, in key coastal regions starting January 2015. The news set in motion a wave of upset and speculation across the coal industry as conflicting media reports were issued concerning the ban’s breadth and potential impact.
The new regulations issued by China’s National Development and Reform Commission (NDRC) outlines the ban of what it names "san mei" coal with more than 16 percent ash and 3 percent sulphur at the start of 2015. NDRC framed the new regulations as ones aimed at curbing emissions to improve air quality in the country’s most densely populated areas – The Pearl and Yangtze River Deltas along with the major cities of Beijing, Tianjin and Hebei.
With the understanding that “san mei” coal translated as thermal coal used for both heating and power generation, the news appeared to signal a serious setback for nation’s supplying the world’s top importer in an already tight market. The coal industry is already feeling the strain of a slowing Chinese economy and competitively priced natural gas.
However, later reports are now saying the NDRC’s use of the label “san mei” had been misinterpreted and does not include coal for power generation. While this does represent a significant shift in the projected impact of China’s new coal regulations, at the time of this publication nothing has been confirmed directly by the NDRC concerning the confusion.