China plans to lower the price of coal-fired power and reduce power consumption prices for industrial and commercial purposes.

The price reductions are part of a government package of adjustments designed to reduce business costs and re-ignite the economy, according to a report by China Metals.

The price for coal-fired electricity will be cut by two yuan (US$0.33) per 100kWh and commercial power users will enjoy the same power prices as industrial users, it is claimed, after a rate reduction of roughly 1.8 yuan (US$0.29) per 100kWh.

Resource taxes on iron ore will be restored but also reduced from 80% of the taxation payment base to just 40%. Last year 78% of iron ore was imported due to high smelting costs and insufficient production in China’s domestic market.

Sluggish prices have adversely affected China’s iron ore companies since 2014 and today only 60% of iron ore firms are in production.

Analysts argue that the electricity price cut will be good news for steelmakers and that the reduction in resource tax on iron ore will improve the profitability of iron ore producers.

Source: China Metals