Nov. 28 (Bloomberg) -- China, the world’s biggest coal producer, will introduce measures including tax cuts and tougher import regulations to help stabilize local operations.
Tax burdens should be cleared by the end of this year as some coal producers already spend 25 percent to 35 percent of revenue on government levies, the National Development and Reform Commission and National Energy Administration said in a joint statement posted on the central government’s website today. China will also increase regulation on imports to prevent cheap supplies from flooding the domestic market, it said.
Coal stocks including China Shenhua Energy Co. and Yanzhou Coal Mining Co. rose in Hong Kong trading today on the reform measures. China Shenhua advanced 1.2 percent to HK$26.45 at the midday trading break, while Yanzhou Coal gained 1.3 percent to HK$8.58. The benchmark Hang Seng Index added 0.6 percent.
“It’s a positive signal for the coal industry, as it shows the government has noticed the situation and promised to get problems fixed,” said Helen Lau, a Hong Kong-based analyst at UOB Kay Hian Ltd. “Strengthened coal import regulation is also positive news as cheap coal imports have been a major factor that squeezed margins of domestic producers.”
Coal for immediate delivery at Qinhuangdao, China’s biggest port for seaborne supplies, increased to 550 yuan ($90) to 560 yuan per metric ton on Nov. 17, the highest level since Aug. 18. UOB’s Lau predicts the benchmark prices will rise 5 percent next year.
To contact the reporter on this story: Aibing Guo in Hong Kong at firstname.lastname@example.org
To contact the editor responsible for this story: Jason Rogers at email@example.com