Interfax China reported that the Shanxi provincial government's aim to set up a platform exchanging Chinese coking coal and coke for Brazilian iron ore is unlikely to proceed due to uncertainties underlying the process as well as the central Chinese governments rein's over exporting such resource.

 

An official with the Shanxi Provincial Development and Reform Commission told Interfax that "The Shanxi provincial government has not yet detailed plans to barter coking coal and coke for Brazilian iron ore, though the idea is currently favored by a number of government officials."

 

According to a 21st Century Business Herald report, Nevertheless, Shanxi Province is planning to construct an additional railway linking its central and southern areas to either Qingdao or Rizhao port in eastern China's Shandong Province, specifically for cargo transport only, which would facilitate success of the proposed exchange platform.

 

Mr Gao Bo an analyst with Mysteel said that setting up such an exchange is not plain sailing. He said that "There are many uncertainties in deciding the value of coking coal and coke, as well as the value of Brazilian iron ore, because price stability in the different markets varies significantly. Chinese coking coal and coke producers may likely get the short end of the stick due to Brazilian iron ore producer Vale's dominance over iron ore supply in the market as the largest iron ore producer in the world."

 

Mr Gao said that Shanxi authorities had approached the Brazilian government regarding direct exchanges of their coking coal and coke for Brazilian iron ore several years ago, but to no avail.

 

Mr Li Jingkang analyst from Capital Futures told Interfax that the Chinese government policies can also stand in the way of the success of such an exchange platform. He said “It is unlikely this kind of exchange will prevail in the future, as the Chinese government's control over coking coal and coke exports is getting tighter and tighter, with China cutting coke export quotas for Chinese companies by 1.15% YoY to 12.01 million tonne in 2008. In August this year, China raised the tax on coke exports to 40% and the tax on coking coal exports to 10%.

 

China exported 9.68 million tonnes of coke during the first half of 2008, down by 5.7% YoY and 28.68 million tonnes of coal including coking coal in first eight months down by 18% YoY.

 

 

Editor:    Ivy

M S N:   noble-ferroalloys@hotmail.com

E-mail:    tiandandan226@yahoo.com.cn

Write to editor: service@ferro-alloys.com