Will coal shares bounce back?
VietNamNet Bridge - The strong increase in coal prices has rekindled hopes for Vietnam's miners and securities investors after a period of disappointment.

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After eight years of decline, the coal price began recovering in early 2016. Analysts commented that the coal price has been witnessing the strongest recovery compared with other types of energy. 

By November 2016, the coal price had increased by 112 percent compared to earlier this year.

According to BIDV Securities, there are two reasons. 

First, in mid-2015, China created the policy of restricting the opening of coal mines for less than 273 days (the duration was 330 days in the past). The decision forced the country to increase imports, because coal accounts for 64 percent of energy consumption in China.

Second, President-elect Trump’s mentioning of the policies to help better the US  coal industry caused the coal price to increase sharply. The price soared by 20 percent on November 10.

The strong increase in coal prices has rekindled hopes for Vietnam's miners and securities investors after a period of disappointment.
By October, Vietnam’s coal inventory level had reached 12 million tons, of which 11 million tons belonged to Vinacomin, the nation’s leading coal miner. If deducting the compulsory inventory of 3-4 million tons, the real inventory level would be 8 million.

However, analysts have commented that the prospect of the industry in Vietnam remains unclear.

Due to the bad impact on the environment, coal mining has to bear high environmental taxes and fees, which makes it difficult for Vietnamese miners to compete with other countries. 

Vietnam now imposes 10 percent on coal exports, listing itself among the countries with highest tax rates. 

Indonesia puts out 390 million tons of coal a year and exports 300 million tons with the export tariff of zero percent. 

Meanwhile, Vietnam, known as a large coal exporter, has begun importing coal. In the first nine months of 2016 alone, the import volume was 10.51 million tons, worth $655 million.

The Ministry of Industry and Trade estimates that the country would import 35 million tons of coal by 2020, and the figure would be 135 million tons by 2030.

VnExpress quoted its sources as reporting that though the coal price has increased by 100 percent in the last year, Vinacomin has raised the purchase price by 6 percent.

According to Military Bank Securities, domestic coal companies may not benefit from the coal price increases. The miners are mostly subsidiaries of Vinacomin which exploit coal under plans assigned by the holding company.

The import price has not seen big changes. A report showed that the price increased slightly by 5.4 percent in the first half of October compared with the first half of June.


Thanh Mai

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