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China’s removal of port construction fees for all import and export goods and a 20% reduction in all other government port charges over March 1 to June 30 could spur a modest uptick in seaborne coal trading activity and reduce costs for end-users, market sources said Wednesday.

State Council premier Li Keqiang announced the moves Tuesday while chairing a State Council meeting. The policy could reduce transportation challenges faced by corporations in delivering essential materials during the coronavirus or COVID-19 outbreak, he said.

China will also continue to apply a 50% reduction in land utilization taxes for warehouses used to stock commodities, without specifying a time frame, he said.

The port construction fee was Yuan 5.60/mt excluding value-added tax or VAT. Such fees are typically imposed to recover the cost of construction and maintenance of harbor facilities.

Market sources said other port charges of Yuan 10–13/mt varied across China, equating to an average of $1.50/mt.

“Chinese end-users would benefit the most from the cost reduction,” a trader in southeast China said.

A trader in south China said some traders could take positions in the seaborne coal market when prices dropped to a desired level due to the low cost of stocking, and release the cargoes in May when coal demand was expected to return.

China announced up to Yuan 25 trillion in COVID-19 financial stimulus measures on Monday, and market sources said the subsequent removal of the port construction fee could further stimulate seaborne coal trading activity to a small extent.

However, Chinese coal buyers were also unnerved by recent restrictions imposed on imported coal in the Fuzhou region as the government tried to support to its domestic coal industry, sources said.

Demand fundamentals for coal impacted by COVID-19 and the seasonal March lull continued to depress coal prices from various origins, and the impact of political stimulus would not be strong, a trader in north China said.

Other coal traders in China said the main purpose of dropping the fee was to simulate trading in essential materials, including coal, while reducing the financial burden of small to medium-sized corporations in the coal industry. “It could reduce Chinese utilities’ cost of operation,” a trader in southeast China said.

However, China’s power utilities had limited import quotas remaining, so the impact of the fee removal was limited, he added.

“Implementation of the policy across China could take time,” a Singapore-based trader said.