Column: China’s export tax bombshell rocks aluminum market
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Miners in China are halting operations to commemorate the Chinese Communist Party’s 100th anniversary celebration later this week, in a move that may exacerbate an already tight coal market and boost prices.
In Shanxi, the country’s biggest coal producing province, 128 of the fossil fuel mines accounting for nearly a quarter of the region’s capacity have suspended operation, according to industry website coal.in-en.com. In Hubei, all of the province’s 17 coal mines are halted until July 5, according to local government.
“Coal supplies have significantly tightened with anniversary celebrations approaching, a spate of recent accidents and production halts across key producing regions,” said Dongxing Futures Co. analyst Qi Chunyi, who forecast prices may advance further.
Coal futures in China have surged to record levels as safety inspections and restrictions on imports from Australia crimp supply, and as robust economic activity fuels demand. While the government has implemented measures to cool markets, prices remain more than 40% higher than a year ago.
The celebrations may also slow transport networks as some areas ban trucks carrying coal from entering, according to Qi. Highly-polluting industrial activity such as steelmaking and coal mining are often paused during important events to ensure better air quality.
Thermal coal futures on the Zhengzhou Commodity Exchange have increased for five straight weeks and traded 0.6% higher to 784.8 yuan a ton at the midday break on Wednesday.
(By Krystal Chia)
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