China Urges More Coal Imports to Keep Lights On
Fast-rising coal prices in China since April have once again made imports an attractive option. China raised electricity prices for some users by about 3 percent last week, the first increase since 2009.
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China will encourage coal imports and urge miners to boost output to increase supplies to power plants, China’s economic planning agency said last week, as the world’s largest energy consumer tackles its worst power shortages in seven years.
Despite its massive electricity generating capacity, China is facing power shortages because power producers are forced to accept a low fixed price for the electricity they supply to the grid, economists say. With high coal costs, many power firms prefer to cut output rather than incur losses.
The National Development and Reform Commission (NDRC) said last week that China would take comprehensive measures to increase energy supplies and curb unreasonable demand.
Eleven out of China’s 31 provinces and regions have introduced power use restrictions since May, the commission said in a report on its website.
But it ordered grid firms to ensure power supplies to households and other important power users.
China raised electricity prices for some users by about 3 percent last week, the first increase since 2009, as power shortages are expected to expand as the peak summer demand season approaches.
It raised the prices at which coal-fired generators sell to grid firms by an average of about 5 percent in three central Chinese provinces from Wednesday after hiking the rates in 12 other provinces on April 10.
After 30 percent growth in coal imports last year, when average monthly imports hovered at around 14 million tonnes, import demand so far this year has been largely unimpressive, with overseas prices too high for many Chinese buyers.
Coal stocks at major Chinese power plants were at nearly 60 million tonnes in late May, enough for 16 days’ power generation, the NDRC said.
Total coal imports in the first four months of the year are down 24 percent to 43.5 million tonnes, as utilities shunned more-expensive supplies from overseas and focused on domestic coal instead.
But fast-rising coal prices in China since April have once again made imports an attractive option and traders are eagerly waiting for the world’s top coal consumer to regain the appetite for foreign supplies it showed in 2009 and 2010.
Those two years of high imports, a lifeline to miners amid the global financial crisis, were largely the result of China cracking down on its own coal miners, forcing many small, dangerous and inefficient mines to shut.
But that campaign has run its course in some areas, and China is now preparing to ramp up output in a network of new coal bases.
Source: Reuters
