China Coal-Prices stable, supply uncertainties remain

Published: 12 Mar 2009 18:39:10 PST

SHANGHAI, March 13 - Spot coal prices at China's top coal port Qinhuangdao were largely flat from a week earlier, but uncertainties in supply remain and may push prices higher.

Coal with heating value of 5,800 kcal/kg was quoted in the range of 580 yuan to 590 yuan ($84.8-$86.3) per tonne at Qinhuangdao, down 0.8 percent from a week earlier. While prices of coal with heating value of 5,500 kcal/kg remained unchanged, according to the Qinhuangdao Seaborne Coal Market (www.cqcoal.com).

China's power output in February rose 5.9 percent on year to 244.938 billion kilowatt hours, the first increase in five months, data from the National Statistics Bureau showed on Thursday. [ID:nPEK76511]

"We have recently received many calls from power plants in coastal provinces asking for prices. Their coal stocks may have been decreasing," said a coal trader based in the southern province of Guangdong.

He forecast a small increase of 5 to 10 yuan ($0.70-$1.50) in the next week or two, as demand from such power plants are likely to go up.

However, he believed that such rises would be short-lived, and prices would return to the current level afterwards.

Coal stocks at the country's power plants connected to major grids were about 30 million tonnes, sufficient for 17 days of use, sources said.

Analysts said many of China's small mines, which contribute to more than one third of the country's coal output, are yet to resume production.

"If small mines in Shanxi do not resume production after the National People's Congress session, the shortfall in supply is likely to push up coal prices. But the momentum would still be rather weak," said Chen Liang, an analyst at Ping An Securities.

The 9-day annual session of the National People's Congress ends later on Friday. It is considered a politically sensitive period, during which the local governments usually ensure their dangerous and inefficient small mines remain closed to avoid high-profile safety accidents.

The provincial government of Shanxi, China's top coal producing province, ordered a year-long safety inspection in its mines, after a fatal mine explosion killed 78 and injured more than 100 in February. ($1=6.839 Yuan)