China, the world's second-biggest energy user, will continue to have a surplus of coal in the short term as a slowing economy restrains demand, an industry official said.
Some small mines may also reopen, exacerbating the oversupply, Wang Xianzheng, head of the China National Coal Association, said at an industry conference in Beijing today. Local governments have kept some small mines shut since late last year to stabilize prices, which have almost halved compared with a record in July 2008.
The Chinese economy expanded 6.1 percent in the first quarter, the weakest pace in almost a decade, as exports slumped. The slowdown cut factory output and energy consumption, with power plants using 8 percent less coal in the first three months compared with a year earlier, Xue Jing, head of statistics at the China Electricity Council, said at the conference.
The utilization rate of power stations may fall 3.8 percent to 4,500 hours this year, said Xue. Electricity demand may rise 5 percent should the economy grow 8 percent, according to Xue.
The nation's first-quarter coal production rose 5.2 percent to 554.3 million tons from a year earlier, the China Coal Transport and Distribution Association said on April 13.
In the long run, the country, which relies on coal to generate almost 80 percent of its power, still faces a deficit of the fuel, Wang said. Annual coal demand may rise to 3.4 billion metric tons by 2020 compared with 2.75 billion tons last year, Fang Junshi, head of the National Energy Administration's coal division, said at the conference.
Coal prices at Qinhuangdao port, a benchmark in China, were between 570 yuan ($83) a ton and 585 yuan as of April 20, according to weekly data published by the China Coal Transport and Distribution Association.
Source: Bloomberg
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