New | Mainland China's power tariff cut set to squeeze coal prices
Regulator's move could force mining firms to cut prices by as much as 60 yuan per tonne
The mainland's decision to cut tariffs for power plants is expected to squeeze coal prices even further, adding to problems facing struggling mining firms this year, an official with the country's coal association said.
Mainland regulators cut power tariffs this month to reflect a decline in coal prices, defying industry warnings the measure would bring more grief to a sector already facing heavy losses.
Jiang Zhimin, the vice-president of the China National Coal Association, told an industry meeting the move for a cut of two fen per kilowatt hour in on-grid power tariffs paid to coal-fired power plants could force miners to cut their prices by as much as 60 yuan (HK$76) per tonne.
"There will be no change to the short-term business environment for coal, and it could even continue to decline in 2015," Jiang said in comments published on the association's website late on Friday.
Severe oversupply has already led to a rapid fall in prices, with coal at Qinhuangdao port down more than 15 per cent this year despite concerted government efforts to curb output and deter imports.
The coal industry is now waiting for regulators to slash value-added tax on coal production.