CLSA Coal in China - Drought, Fushan, CRR (7p note), from Andrew Driscoll

Another reason why coal prices will remain tight ..

Drought conditions in China are impacting hydropower generation (utilisation -17% YoY in 2M10).
We est. a 15% reduction in hydropower generation could result in 34Mt incremental thermal coal demand.
This equates to a 2% increase in coal demand for thermal power or 1.1% increase in total coal demand in 10CL.
After falling 15% thermal coal prices are stabilising - Weak hydro may lend support in the seasonal low period.
Separately, CRR's latest findings on Shanxi consolidation, inventory, the coking coal market and imports: