It is reported that China's interest reduction has limited effect on weakening coal industry and there is likelihood to be oversupplied in the coming two years, thus, the price may maintain in a downward track for a long period.
Shanghai Security News reported on December 1st that, the international coal price dived again by USD 7.5 per tonnes to USD 8.19 per tonnes on November 28th down by 8.75% from last week. It is said that, this is the same case with the domestic market. A lot of industry insiders are pessimistic on future market development citing continuous price drop.
Mr Wang Guangju, analyst in Huatai Securities said that "Price was sliding all the time after it set a record high in August. Currently, price for high quality coal at Qinhuangdao Port has already dropped by 35%. It may keep falling for a long time."
According to Galaxy Securities "Although the interest reduction can help listed companies to cut their financial cost to some degree, yet generally speaking, there is no substantial influence and it will only help to increase their EPS by 3.78% at most. The price is expected to see a further decrease as for the weak demand. It also pointed that, as the coal industry is cyclical, its period would lag for about one year behind the macro economic cycle averagely.”
Mr Wang analyzed said that "There is indeed a great fallback for ex works price and it is not likely to be lower than last year's contract price, however, it is hard to improve in the future." Enterprises are loosing its control power on 2009 contract negotiation. Therefore, contract price for 2009 is not likely to increase.