China looking to tax coal price spike


Coal is another commodity that is spiking amid a weaker dollar and surging global demand for fuel. The Chinese market is especially robust, but Beijing  may be trying to get a piece  of that action.

The price of heating coal has spiked 10% in China since September, largely due to exchange rates and traders' bets that next winter will be cold -- possibly as cold as last year's twice-a-century cold snap that brought snowstorms deep into the heart of southern China.

Analysts are looking for another 7% increase by the end of the year, which would push coal prices well above the record of $127 a ton hit last January.

Meanwhile, Beijing is looking at boosting its tax on coal sales to somewhere in the 3% to 5% range from the currently minimal 1% it now charges mining companies.

Although this is nothing like the "super tax" that Australia is seeking to impose on local mining companies there, it will definitely challenge Chinese coal company profits if implemented.

It is more likely that miners like  YZC   (quote) will simply pass on the added cost to power plant operators, which will have to absorb the surcharge without passing it on to their heavily subsidized subscribers.

In the meantime, a strong coal market is definitely a plus for YZC.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: News Headlines , ETFs , International

Referenced Stocks: YZC

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