China, which is the world’s second-largest energy user, may consume between 4 and 6% more coal next year on continued economic growth, China Securities Journal said, reporting on a forecast from the China National Coal Association. Demand from the world’s biggest producer and consumer of coal could be about 3,400 Mt from this year, the newspaper reported. China uses coal to fuel about 80% of its power plants and to make steel.
Government stimulus may boost economic growth by more than 8% this year, according to official forecasts, spurring factory output and power and fuel use. China’s energy demand may rise 3.6% in 2010, Shanghai Securities News said, citing National Energy Administration Director Zhang Guobao.
Growth in coal demand should be fairly stable in 2010, as economic growth next year is expected to be as strong as this year. So power demand will be high also. Electricity generation in the world’s third-biggest economy climbed at the fastest pace in almost five years in November as industrial production grew 19% in the month, data from the National Bureau of Statistics showed. Coal consumption is expected to increase between 6 and 7% to about 3,200 Mt next year. Also, the country’s coal production capacity may expand by almost 300 Mt in 2010. Supply and demand of coal in China should stay largely balanced next year. Short-term supply tightness in certain regions will still be seen in the first quarter.
The provinces of Hubei, Hunan, Henan, Jiangxi and Sichuan and the municipality of Chongqing are facing tight electricity supply partly because of falling coal stockpiles at power plants, the official Xinhua News Agency said on December 24.
Coal prices at Qinhuangdao port, a benchmark in China, rose 5.4% to an average of RMB780/t as of today, compared with the previous week, according to the China Coal Transport and Distribution Association. That’s the biggest gain since December 22 last year. To avoid shortages, the government is encouraging coal producers and buyers to sign long-term supply contracts of at least five years.
Coal miners in the central province of Henan negotiated a 25% increase in prices under annual sales contracts with power producers for 2010, the Shanghai Securities News said on December 24. Buyers agreed to pay RMB550/t, the newspaper said.