March 5, 2020 - Two Chinese steelmakers, buyers of US coal in the past two weeks, said Wednesday they had received exemptions from the 27.5% tariff imposed on US coking coal by the Chinese government.

China's Ministry of Finance said February 18 that they would offer tariff exemptions on several US imports, including US-origin metallurgical coal and thermal coal. Applicants could apply for exemptions from March 2.

"This is a policy enacted by the government and I do not think there will be any issues with it," one of the Chinese steelmakers said. Another Chinese steelmaker described the process as near "seamless."

Currently, US coking coal is subjected to a total of 30.5% tariffs and duties. The tariff components include 3% import duty, followed by an imposition of a 25% tariff on July 6, 2018. This was then followed by an additional 5% tariff imposed on September 1, 2019, which has been cut to 2.5% following China's tariff adjustment that took effect February 14.

Both steelmakers purchased US-origin Buchanan coking coal at around $150.90-$153.50/mt CFR China, excluding 3% import duty in the past two weeks. Both steelmakers said the primary purpose of the coal was to reduce their coal blending's ash content. Buchanan has a typical ash content of 5-6% air dried basis.

China imported 64.2 million mt of coking coal in 2018, of which only 3% was from the US, according to Chinese customs statistics. In 2019, total Chinese imports of the US coking coal between January and November were 1.1 million mt, down 43% from the same period recorded for 2018.