Turkey lowers import tax on US coking coal

Turkey has cut its customs duty on imports of US coking coal to 5pc from 10pc, after the US halved its tax on imports of Turkish steel to 25pc last week.

Turkey imposed a 5pc import duty on coking coal imports from the US in June last year in response to the Section 232 tariffs introduced by the US on steel imports. The country raised the import duty to 10pc for coking coal and 13.7pc for thermal coal in August 2018, in retaliation to the US doubling of import tariffs on Turkish steel.

Turkish basic oxygen furnace (BOF)-based steelmakers have welcomed the decision to lower the import duty to 5pc as coking coal imports constitute one of their largest input costs.

"The tax increase last year lifted our coking coal import cost by around $30mn", a Turkish mill said. "We tried to substitute US coking coal with Australian material, but we were not entirely satisfied with the quality."

Lower production costs for BOF-based producers could place them at a more advantageous position against electric arc furnace (EAF)-based producers. That said, the rise in iron ore prices over recent months could offset some of the potential gains, according to market participants.

Most Turkish mills are EAF-based and they produced 7.39mn t crude steel in January-April, representing 65pc of total crude steel output. BOF-based production was 3.85mn t during the same period, accounting for 35pc of total crude steel production, according to the Turkish steel producers' association.