The Minister of Finance Xie Xuren said in an interview with the media a few days ago that the resource tax reform will be fully implemented in the next five years. Experts believe that the increase in the cost of coal resources caused by the resource tax reform will inevitably push up the price of coal, and the rise in domestic coal prices may change the current status of domestic buyers who are far from the imported coal.
Resource taxes push up coal prices
Because of its close links with power generation, steel, and other industries, coal resource tax reform has historically been called the most complex part of resource tax reform. Michael Cooper, an expert on energy information provider Platts, disclosed in an interview with the "First Financial Daily" yesterday that China originally planned to collect a 5% coal resource tax on January 1, 2011, but the National Development and Reform Commission has not yet released it. This news, a coal trader predicted to him that the tax may be imposed after the Spring Festival, which may lead to a 5% increase in coal prices, making imported thermal coal more attractive to Chinese buyers.
According to data provided by Michael Cooper, the current 6,000 Kcal coal mine at Qinhuangdao Port has a closing price of 835 to 845 yuan per ton (about 126 to 128 US dollars per ton), and the 5500 Kcal coal offer at 785 to 795 yuan. / Ton (118-119 US dollars / ton). On the other hand, thermal coal FOBs from Australia and Richard Bay were US$113/tonne, and FOB Indonesia was US$114/tonne. In addition to the 17% value-added tax and shipping costs, Australian thermal coal prices will increase by about US$15/ton.
Thus, at present, most of the imported thermal coal does not have an advantage in price, and domestic electric power companies still prefer to buy domestically produced thermal coal with a relatively low price. However, if the coal resources tax raises the price of coal by 5%, the market situation may change.
Yan Zhang, a board of directors of Yanzhou Coal Mining (600188.SH, hereinafter referred to as “Yanzhou Coalâ€), told the newspaper that the reform of the resource tax was changed from "quantity measurement" to "ad valorem measurement." It is bound to increase the production costs of coal companies. Therefore, in order to maintain the necessary profit margins, the rise in coal prices is inevitable. However, from the perspective of large listed companies, such as Yanzhou Coal, and many coal central enterprises, the resource tax reform can also improve the industry's access threshold, thereby squeezing out some small coal enterprises that lack cost control.
“Resource tax reform will definitely have a certain impact on coal companies in the short term, but in the long run, companies can transfer the increased costs through the price transmission mechanism to the middle and lower reaches, but this will increase the prices of specific products, and thus weaken it to some extent. The competitiveness of domestic coal increases the amount of imported coal,†Zhang Baocai told the newspaper.
Power coal import resistance
Resource tax expectations did not make coal traders happy.
“The most troublesome thing for me at this stage is the weak demand in the coal market. On the one hand, it is due to the declining demand for the coming Spring Festival. On the other hand, the thermal power plants in the coastal areas are currently in full inventory.†Li Xuegang, general manager of Qinhuangdao Coal Trading Market, told the newspaper that the macro economy On the other hand, at present, the country has placed an important position on changing the mode of economic development and accelerating economic restructuring. The growth of energy consumption will gradually slow down, which may suppress the demand for energy, including coal, in the entire market.
According to Michael Cooper, many coal-fired power plants in southern China are no longer looking for seaborne coal and coal, which has historically been a major demand area for imported coal. At present, frozen rain and snow in southern China will push up electricity demand, leading to a shortage of coal in some power plants, but this situation is limited to some coal-fired power plants. At present, the average number of days available for electricity coal inventories of major power plants in China is close to 15 days. Even if there are shortages in some parts of central China, such as Henan and Anhui, the available days for inventory are also 7-10 days. He also revealed that due to the relatively weak demand in the Chinese market and the relatively active Korean market, some international sellers who would have wanted to sell coal to China are now selling to South Korea for inquiry.
Resource taxes push up coal prices
Because of its close links with power generation, steel, and other industries, coal resource tax reform has historically been called the most complex part of resource tax reform. Michael Cooper, an expert on energy information provider Platts, disclosed in an interview with the "First Financial Daily" yesterday that China originally planned to collect a 5% coal resource tax on January 1, 2011, but the National Development and Reform Commission has not yet released it. This news, a coal trader predicted to him that the tax may be imposed after the Spring Festival, which may lead to a 5% increase in coal prices, making imported thermal coal more attractive to Chinese buyers.
According to data provided by Michael Cooper, the current 6,000 Kcal coal mine at Qinhuangdao Port has a closing price of 835 to 845 yuan per ton (about 126 to 128 US dollars per ton), and the 5500 Kcal coal offer at 785 to 795 yuan. / Ton (118-119 US dollars / ton). On the other hand, thermal coal FOBs from Australia and Richard Bay were US$113/tonne, and FOB Indonesia was US$114/tonne. In addition to the 17% value-added tax and shipping costs, Australian thermal coal prices will increase by about US$15/ton.
Thus, at present, most of the imported thermal coal does not have an advantage in price, and domestic electric power companies still prefer to buy domestically produced thermal coal with a relatively low price. However, if the coal resources tax raises the price of coal by 5%, the market situation may change.
Yan Zhang, a board of directors of Yanzhou Coal Mining (600188.SH, hereinafter referred to as “Yanzhou Coalâ€), told the newspaper that the reform of the resource tax was changed from "quantity measurement" to "ad valorem measurement." It is bound to increase the production costs of coal companies. Therefore, in order to maintain the necessary profit margins, the rise in coal prices is inevitable. However, from the perspective of large listed companies, such as Yanzhou Coal, and many coal central enterprises, the resource tax reform can also improve the industry's access threshold, thereby squeezing out some small coal enterprises that lack cost control.
“Resource tax reform will definitely have a certain impact on coal companies in the short term, but in the long run, companies can transfer the increased costs through the price transmission mechanism to the middle and lower reaches, but this will increase the prices of specific products, and thus weaken it to some extent. The competitiveness of domestic coal increases the amount of imported coal,†Zhang Baocai told the newspaper.
Power coal import resistance
Resource tax expectations did not make coal traders happy.
“The most troublesome thing for me at this stage is the weak demand in the coal market. On the one hand, it is due to the declining demand for the coming Spring Festival. On the other hand, the thermal power plants in the coastal areas are currently in full inventory.†Li Xuegang, general manager of Qinhuangdao Coal Trading Market, told the newspaper that the macro economy On the other hand, at present, the country has placed an important position on changing the mode of economic development and accelerating economic restructuring. The growth of energy consumption will gradually slow down, which may suppress the demand for energy, including coal, in the entire market.
According to Michael Cooper, many coal-fired power plants in southern China are no longer looking for seaborne coal and coal, which has historically been a major demand area for imported coal. At present, frozen rain and snow in southern China will push up electricity demand, leading to a shortage of coal in some power plants, but this situation is limited to some coal-fired power plants. At present, the average number of days available for electricity coal inventories of major power plants in China is close to 15 days. Even if there are shortages in some parts of central China, such as Henan and Anhui, the available days for inventory are also 7-10 days. He also revealed that due to the relatively weak demand in the Chinese market and the relatively active Korean market, some international sellers who would have wanted to sell coal to China are now selling to South Korea for inquiry.
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