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Coal prices drop as energy crunch eases
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Coal prices in China have started to decline as the nationwide energy crisis triggered by wild February snowstorms starts to ease, China National Coal Association said yesterday.

Coal production across China has been restored from four million tons to the previous level of about five million tons per day, while the country's coal consumption decreased by 300,000 tons each day due to warmer weather, China Central Television Station reported today.

Stockpiles of coal at power plants across the country are sufficient to meet demand for up to 15 days, the report said.

China, the world's second-biggest energy consumer, burns coal to supply 78 percent of its electricity.

Up to 170 Chinese cities had blackouts as snowstorms paralyzed power grids and delayed coal delivery in late January and early February. Electricity demand also rebounded "rapidly" after factories resumed production following the Spring Festival holidays, making the coal energy crunch even more serious.

The strong demand for coal led to higher coal prices agreed between Chinese coal miners and power firm buyers, squeezing profit margins at domestic power generators as the price of electricity is set by the government of China to contain inflation and shield poorer people.

The association also expected that China's coal production will rise by more than 200 million tons this year, which is just enough to cover a demand growth in industrial sectors such as electricity, construction materials and iron and steel production, the report said.

(Shanghai Daily April 3, 2008)

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