The new year is bringing changes to international coal markets, in part because China, the world's largest consumer of coal, is implementing policy changes that target the country's thermal and coking coal markets.Coking coal export tax removed In late December, China "covertly" lifted a 40-percent tax on coke — a product of coking coal that is used in steelmaking — exports imposed on domestic suppliers after a recent ruling against the practice was delivered by the World Trade Organization. Chinese coke exports dried up in 2012, with a mere 1 million tons (Mt) sent abroad compared to the 2007 average of 15 Mt. The withdrawal of the tax will be largely positive for domestic coking coal producers, enabling them to access a wider range of potential markets. Exports, should they rebound to the average 2007 level, will correspond with a demand increase of 20 Mt of coking coal, equivalent to approximately 14 Mt coke. In a note to investors, Brean Capital predicted that the tarrif removal will negatively impact the seaborne met coal market as Chinese coke floods international markets, Platts reported. An increased supply of Chinese coke would negate the need for seaborne coking coal in coke- and steel-producing countries like India and Japan, Brean analyst Lucas Pipes argues in the article. Pipes expects that the net result of the measure could be a 15-Mt reduction in seaborne coking coal demand — equivalent to around 5 percent of the total global met coal seaborne market if China's coke production levels return to the 2007 average. Current Q1 coking coal Australian benchmark prices averaged $165/Mt FOB, but could drop if the dynamic plays out as Pipes believes it will. Thermal market reforms In China's other coal market, the country's price regulator announced that beginning January 1, it will no longer set the prices negotiated between thermal coal producers and power providers, according to a statement issued by the National Development and Reform Commission.