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Energy

China's coal prices fall for 1st time in 3 months

Updated: 2010-12-06 16:38

(Agencies)

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Power-station coal prices at Qinhuangdao port, a Chinese benchmark, fell for the first time in three months, Bloomberg reported on Dec 6.

The price drop comes after stockpiles of the fuel surged and the government called for stability in the cost of commodities.

Coal with an energy value of 5,500 kilocalories per kilogram slipped 0.6 percent from a week earlier to between 795 yuan ($120) and 810 yuan a ton on Dec 6, according to data from the China Coal Transport and Distribution Association. That's the first decline since Sept 8, according to Bloomberg.

Power stations have been building inventories since early September to meet winter heating demand in response to previous media report that the nation was expected to experience abnormally low temperatures this year.

Coal stockpiles at Qinhuangdao jumped 15 percent from a week ago to 6.73 million tons, Bloomberg cited the China Coal Transport and Distribution Association.

Coal demand hasn't risen as much as expected so the winter stockpiling seems a bit overdone, David Fang, a director at the association, told Bloomberg. Demand remained weak because of government measures to meet energy conservation goals, and there were no surprises in the weather, Fang said.

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China aims to reduce energy use per unit of GDP by 20 percent in the five years ending 2010 and has taken steps to curb consumption.

China's energy intensity fell about 3 percent in the first nine months of this year, Bloomberg said, citing Zhao Jiarong, a deputy secretary general at the National Development and Reform Commission.

The coal-price decline at Qinhuangdao follows calls by the government to ensure price stability, after inflation rose to the highest in more than two years in October.

Power-station coal prices under term contracts for 2011 must be unchanged from 2010 levels, Xinhua reported on Dec 1, citing Cao Changqing, head of pricing at the NDRC.

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