China has issued a second batch of export quotas, bringing total quotas for the year to a level just below last year's amount, but tight domestic supplies could lead to higher export tariffs and further increases in the export price.

The Ministry of Commerce has allocated 2.39 million tonnes in coke export quotas, the second batch this year, according to the agency website (www.mofcom.gov.cn). That brings this year's total export quotas for coke, a key ingredient in steel making, to 12.01 million tonnes, down 1 percent from 2007. Export quotas have stayed steady despite rising output, as domestic demand has grown.

Meanwhile, a slump in shipments in June has pushed up export prices. Those prices could rise further if, as state media has speculated, export tariffs for coke are increased. "If the export tariff were raised to 30 or 35 percent, the export price would hit almost $1,000. That would discourage international buyers," said a coke trader based in Shanxi.

Export prices for first-grade metallurgic coke at Tianjin port had reached $730-740 a tonne, FOB, the Shanghai Securities News reported on Tuesday, up from about $675 at the end of June and up more than 50 percent since the beginning of this year.

"The coke export price has never been this high in recent years," said the Shanxi-based trader. China has been trying to cut down on exports of energy-intensive and highly polluting products, such as coke. At the same time, several years of rapid expansion by the steel industry have soaked up domestic output. "Coke exports account for a smaller and smaller percentage of the country's total output," said Yang Wenbiao, secretary general of China Coking Industry Association.

China's coke output is expected to rise to 350-360 million tonnes in 2008, Yang said. In 2007, China produced 329 million tonnes of coke, according to the National Statistics Bureau.

EXPORT TARIFF MAY RISE

China may raise the export tariff for coke, as tight supplies of its main input, coking coal, push up prices even as the government is trying to clamp down on polluting industries in order to clean up the air before the Beijing Olympics.

The Shanghai Securities News reported on Tuesday that the export tariff could be raised to at least 30 percent, quoting unnamed industry sources. "Since China has the pricing power, an export tariff hike would be passed on to buyers and push up prices," said an analyst at a large state-owned securities firm, who declined to be named.

China exported 1.5 million tonnes of coke in June, down 10 percent from the previous month, reversing an upward trend in coke exports from February to May. It exported 7.44 million tonnes in the first half, down 7.5 percent on year. The monthly rise in coke exports from February to May had spurred speculation that Beijing might raise export tariffs for coke. Beijing raised the export tax for coke in January to 25 percent from 15 percent.