Others News
- Thermal coal prices up around 11%
Date: 23-Jan-2007 Sources: (Shenzhen Daily)
THE country's main coal producers and power generators have reached an agreement to raise thermal coal prices by around 11 percent this year, and electricity prices could also rise under a mechanism that links electricity prices to coal prices.
This marks the first price hike agreement based on negotiations between coal and power companies after the government fully liberalized the market earlier this year.
Both parties have agreed on an average 30 yuan (US$3.86)-a-ton hike in thermal coal prices, according to Xinhua.
The price of thermal coal has risen to around 300 yuan a ton from 260-280 yuan a ton last year, an industry official, who declined to be identified, said.
The rise was mainly driven by coal producers' request to raise thermal coal prices, which were kept at low levels last year due to government intervention.
Thermal coal accounts for about half of the country's coal production, which totaled 2.33 billion tons last year.
Coal production for usage in other industries, such as metallurgy, rose by 3-5 percent on average, or 20-40 yuan a ton, Xinhua reported.
Coal accounts for about 70 percent of China's energy mix.
Industry analysts expect electricity prices to rise in the middle of this year, as the country's top planning agency earlier this year said China will continue to adjust State-set electricity prices in tandem with coal price changes.
The electricity-coal price linkage mechanism requires domestic electricity prices to be adjusted if domestic coal prices rise by an average of 5 percent or more over a period of six months.
Over the past two years, China has hiked domestic electricity prices twice based on gains in coal prices.
In another development, Australian coal miners hope to hike Asian thermal coal contract prices in 2007, encouraged by increased demand from Asian utilities and by supply constraints.
Producers are aiming for US$54-US$5455 a ton for thermal coal, which is used in power generation. This compares with a benchmark export price of US$52.50 a ton in the year to April 2007, based on Australian miner Xstrata's settlement with a group of Japanese utilities.
Although Indonesia and Australia, two of the world's biggest thermal coal suppliers, were projected to ramp up supplies in 2007, industry sources said Asia's markets would tighten as China curbs exports and soaks up more coal.
'China is still the main factor everybody is keeping an eye on. There are already talks of China reaching a long-term settlement contract with the Japanese and Koreans at about US$60 per ton, so that will certainly have an impact in dragging up Australian prices,'a source at an Australian coal producer said.
Long-term prices of Chinese coal were fixed at US$52.97 a ton last year.
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