Chinese Mandarin - Increase in coal prices to exceed 10% in 2005

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Increase in coal prices to exceed 10% in 2005

www.chinanews.cn 2005-02-02 16:36:27

Chinanews, Feb. 2 - The Market Economic Research Office of the
Development Research Center under the State Council released a report on
the market situation in 2004 and economic forecast in 2005 on January 31.
The report predicted continuous growth in the price of coal, coupled with
strained coal demand in 2005.
The center pointed out that China's current industrial coal consumption
accounted for over 90% of its national consumption. In particular, the
total coal consumption of five industries, including electricity,
metallurgy, building materials, petroleum and coking coal, constituted
over 75% of national consumption. As electricity generation continues its
fast growth in 2005 and high energy-consuming industries such as
metallurgy expands production capacities as a result of increased
investment, the overall demand for coal will continue to grow this year,
mainly to meet the needs of electricity and metallurgy. The additional
demand is estimated at 150 million tons.
In addition, due to rise in international coal prices, relatively low
domestic coal reserves and high coal demand, domestic coal prices will
likely be driven by demand. Raw coal price will increase by 10% for the
whole year, and 15% in the first quarter compared with the same period
last year.
Statistics indicates that between January and November last year, fixed
assets of coal industries increased 63.7% over the same period of the
previous year, much faster than growth in fixed assets investment and
industrial investment in the whole society. At the same time, unmitigated
demand and high price level will stimulate coal production. Output of raw
coal is estimated to reach 2 billion tons in 2005, up 8.5%, or 120 to 180
million tons, over last year.

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