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Tax hike may reduce Chinese coal exports

Tax hike may reduce Chinese coal exports

Beijing: 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, writes Reuters.

China, the world's largest producer and consumer of coal, on Friday said it would impose an export tax of 10% 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. The country also raised taxes on coking coal and coke, key ingredients in steel making.

Coal exports had already slumped by a third in July from June as international prices fell from record highs, although shipments in the first seven months of the year are up 5% from a year ago as Chinese producers took advantage of the gap between lagging local prices and hot overseas markets.  [19/08/08]