China to burn higher quality coal for power

Wants to impose tough standards that will benefit domestic producers.

China may impose higher quality standards for imported and locally traded coal to cut air pollution.

The National Energy Administration proposes that imported coal have a minimum calorific value of 4,540 kcal/kg; a maximum sulfur content of 1 percent and 25% ash on a net-as-received basis.

The proposed requirements for locally traded coal will be more lax, with a minimum heating value of at least 3,584 kcal/kg; a maximum ash and sulfur content of 40% and 3%, respectively.

No decision has been made as to when a final decision on implementing the standards will be made

If adopted, the proposals will hit the world's top thermal coal supplier Indonesia that has been exporting increasing quantities of coal with low heating value to China. It could also affect sellers of U.S. steam coal with high sulfur content.

China imported 54 million tons of lignite in 2012, a low-grade coal with a calorific value lower than 4,500 kcal/kg, most of which came from Indonesia.

Analysts said domestic coal prices would get a boost as utilities will be forced to use more local supplies. Higher Chinese prices and requirements for better coal specifications could also prompt local utilities to buy more from Australia or South Africa.