China's coal industry to be gloomy in 2009

The outlook of China’s coal industry in 2009 is forecasted to be gloomy amid ongoing deteriorating worldwide financial crises and sharply sliding coal demand in downstream industries. The downturn of domestic coal price will not radically change although the government has removed coal price cap and provided 4-trillion financial aid.

The surplus of domestic coal supply and sluggishness in downstream demand further decrease the coal price. The FOB trimmed price for main thermal coal at Qinhuangdao port has dropped 380 yuan/t to 600 yuan/t ended 15 Decembr, down 39 percent from 13 October of 980 yuan/t.

Besides, the coal price is also closely related to the international oil price. According to statistics, the coal price at Newcastle Harbour has declined by almost 61 percent from a record 194.79 US dollars on July 4. to 76.09 US dollars per ton at the beginning of December.

The plunging coal price has trapped purchasing contract negotiations between coal enterprises and power generators into great embarrassment.



In addition, the government adjusted some policies which brought negative impact to coal industry. The added value tax charged on coal enterprises has been raised to 17 percent from 13 percent, which would impose great pressure on the operation performance.

Besides, the coal resource tax is likely to be charged according to value for about 10 percent rather than volume. The above two parts would approximately increase the coal production cost by 50 yuan per ton.

 

(Source:en.sxcoal.com)