China’s coal exports seen falling after tax hike

China’s coal exports could fall further in September as higher export taxes take effect, pushing up international prices and giving Australian producers a stronger hand in upcoming contract negotiations.

China, the world’s largest producer and consumer of coal, on Friday said it would impose an export tax of 10 percent on thermal coal starting Aug. 20, as it seeks to ease a severe power shortage that has forced half the nation to ration electricity.
“The move will greatly reduce exports on the spot market. Besides the term contracts, there will be very little exports.” said Judy Zhu, an analyst at Standard Chartered Bank in Shanghai.

China also raised taxes on coking coal and coke, key ingredients in steel making.

“This is yet another indicator that China’s supplies will be tighter than we had initially expected and should be a boost to Asian coal prices,” said Mark Pervan, a senior commodities analyst at the Australian & New Zealand (ANZ) bank in Melbourne.

Reuters