Energy

High int'l prices unlikely to deter coal imports

By Du Juan (China Daily)
Updated: 2011-04-20 13:44

BEIJING - China's total coal imports will stay at a high level this year despite the drop in February because of rising international prices, the China National Coal Association (CNCA) said.

International coal prices increased to $120 a ton on March 31 from $30 a ton the same period last year, boosted by stronger demand from reconstruction efforts in Japan after the March 11 earthquake and because of the diminished supply after the floods in Australia.

China imported 23.3 million tons of coal in the first two months of this year, an 18.8 percent year-on-year decrease. In February alone, the country's imports fell by 47.6 percent year-on-year, according to the CNCA.

China imported 146 million tons of coal in 2010, 42 percent more than the previous year.

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The association estimated that coal imports in March would be about 9 million tons and that domestic coal demand will keep rising because of the nation's fast economic development. However, the growth rate might be a little lower than before.

The association said that countries such as Indonesia, Australia, Russia and Mongolia will keep increasing their coal exports to China this year.

Dai Bing, a senior analyst at the online coal trading website coal.com.cn, estimated that about 200 million tons of coal will be imported in 2011.

"Higher international coal prices have increased the costs for steel companies and coking plants," said Zhang Lin, a senior analyst at the Beijing Lange Steel Information Research Center.

"Under the current market price, coking coals contribute about 20 percent of the cost for steelmakers, so higher prices will adversely affect them."

She said that even though international coal prices are going up, large Chinese steelmakers will continue to import coking coals because they need high quality coal with greater energy efficiency and lower emissions.

"Domestic coal production cannot meet the huge demand from industrial users, so domestic prices will also go up," she said.

According to the China Electricity Council, the country's total power consumption for 2011 will be 4,700 billion kilowatt-hours, a 12 percent year-on-year increase. Coal demand in the power sector will reach 1.92 billion tons, a 9.9 percent increase.

The annual coal demand for construction and the building materials industry will be 500 million tons, a 3.2 percent year-on-year increase, the association said.