Local Price Regulation Fund Hits Coking Industry Harder

SHANGHAI, Oct. 17 (SMM)--Guizhou province decided to levy 10% price regulation fund on raw coal starting October 1st, raising the fund by RMB 200/mt on exported raw coal and washed and dressed coal.

In addition, Henan government levies RMB 20/mt of price regulation fund for raw coal, RMB 30/mt for washed and dressed coal, and RMB 35/mt for coking coal.
Guizhou adjusted the regulation fund significantly, in order to ease coal resource shortages in the province, and subsidize fire coal power plants with the fund. Guizhou’s raising regulation fund significantly affected local coal enterprises. But Steelease believes that most significantly affect is that other large coal producing provinces will follow to further hike coal price regulation fund. Costs at coal enterprises will necessarily rise as local governments protect resource products.

Coal enterprises reported the affects from resource tax hikes were not as significantly as the adjustment of regulation fund. Steel plants are facing great pressure due to falling steel prices, and the regulation hike in Henan has affected PCI coal prices. Ex-work lean PCI coal prices in Hebi were up RMB 30/mt, to RMB 1,330/mt, and price to factory (including tax) are now RMB 1,360/mt. Smokeless PCI coal prices (free on rail, including tax) in Jiaozuo are RMB 1,245/mt, up RMB 35/mt. Smokeless PCI coal prices (free on rail, including tax) in Yongcheng are RMB 1,295/mt, up RMB 35/mt.