Chinese coal mining giant China Shenhua Energy Co has agreed long-term contracts with some Chinese power producers, its President Ling Wen said on Monday.
Shenhua and China's other big coal miners have been struggling since the start of the year to agree 2009 prices with the big five power generators -- Huaneng, Datang, Guodian, Huadian and China Power Investment Corporation.
Asked about the progress of the talks at a media briefing, Ling said the firm had signed some agreements with the country's power plants for domestic long-term contract sales, but declined to disclose the price. He did not name the power firms.
"The contracts so far that have been signed are very satisfactory from our point of view," Ling said. "Whether it is from a quantity or price point of view, we are confident that our sales target will be met." He did not elaborate, nor did he say whether the 2009 price negotiation was effectively over.
Some industry sources cautioned that a price settlement between Chinese suppliers and domestic utilities could also mark an end to China's recent binge on overseas coal, which could threaten Asian spot coal prices.
"This will change market dynamics. Chinese utilities have been buying a lot of coal from Indonesian and Australian producers and that has offered some support to Asian prices," said a Sydney-based trader.
"And once they've reached a local supply agreement, they won't need to ship from overseas anymore. A lot of producers will have trouble finding a market for their cargoes."
Source: Reuters
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