China may impost 5pct coal resource tax

Thursday, 27 Jan 2011

According to the latest statistics of Michael Cooper at Qin Huangdao port, China largest coal terminal, power coal with caloric value of 6,000 kilocalories per kilogram has recently stood at CNY 835 per tonne to CNY 845 per ton and that with caloric value of 5,500 Kilocalories per kilogram at CNY 785 per tonne to CNY 795 per tonne.
The FOB price of power coal at Australia and The Richards Bay remains at USD 113 per tonne and that at Indonesian ports USD 114 per tonne.

With the 17% VAT and all other charges considered, foreign coal is not at all competitive to domestic coal consumers. However, if domestic coal prices are 5% higher, things may take a turn and that’s exactly what the coal resource tax will probably cause.
Mr Xiexu minister of The Ministry of Finance said in an interview recently that the coal resource tax policy will be fully put into force in the coming five years. This raise concerns in the industry that the tax will add to resource costs and lead to increases of coal price. One obvious result may be that this may endear foreign resource to domestic coal consumers.

An expert from platts, an energy service provider, revealed that China was originally planning to impose 5 % coal resource tax from January 1st 2011, yet no announcement had been received from China’s National Development and Reform Commission so far. On that occasion there were coal dealers predicting that this may come to pass after the spring festival.
According to the above coal dealers, this may lead to a 5% rise in coal price and consequently foreign coal may suddenly become appealing to Chinese buyers.

Nevertheless, coal demand is sluggish now. Power groups had filled their warehouses with coal for further consumption. From a broader perspective, China’s economy is witnessing a shift in development mode, and this determines, on a broader sense, the growth of energy consumption will be milder. (Sourced from MySteel.net)Visit www.Mysteel.net for real time access to China steel news!