[...]STEAM COALThe step-up in environmental checks has also...

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STEAM COAL

The step-up in environmental checks has also prompted some power plants to switch to higher grades of coal.

"Many power plants are beginning to worry about the inspections and have begun to switch to higher-quality coal with lower sulphur and ash content," said a Beijing-based trader.

China's imports of lignite, a type of coal with low heating value, have surged in recent years, thanks to an abundance of cheap supplies from Indonesia and Vietnam. However, the high moisture content of lignite means it emits more carbon dioxide than higher quality coals.

Expectations that Beijing may soon introduce even more stringent requirements on coal use at power plants have also led miners to hold off on signing fresh contracts with Indonesian suppliers, trade sources said.

A policy setting new minimum heating values for lignite, currently at the draft stage, would benefit Australian miners who produce low-ash coal of high calorific value, and threaten the export prospects of Indonesia's low-ranked coal miners.

China imported about 87.5 million tonnes of lignite in 2013, mostly from Indonesia.

Enquiries for Indonesian coal with heating value of around 3,800 kcal/kg (NAR), previously popular with Chinese buyers, have already dried up, traders said, adding that buyers are now switching to coal with at least 4,700 kcal/kg (NAR).

"We think that the majority, perhaps as much as 80 percent of the total volume, of Indonesian lignite would struggle to fit the minimum heating value requirement," Macquarie Bank said in a recent report.

source: http://www.reuters.com/article/2014/01/26/china-steel-pollution-idUSL3N0KJ2C920140126