Coal imports surged to the highest level in at least 22 months in February to 4.88 million tons, according to data released by the General Administration of Customs on Monday. That represents a 63 percent increase compared to January, and a 73 percent increase compared to February 2008.

Analysts say that China, the world's biggest coal producer and consumer, increased imports of the fuel as power producers boosted overseas purchases on falling international coal prices and lower shipping costs.

Benchmark prices for coal fell to US$62.10 a ton in the week ended March 13 at Australia's Newcastle port, compared with an average of US$129 a ton in 2008. The coal price at Qinhuangdao port, a benchmark for China, stood at 557.5 yuan (US$81.5) a ton as of March 16, according to the China Coal Transportation and Distribution Association. The Qinhuangdao coal price has fallen from a July record of 995 yuan a ton.

The disagreement between China's utilities companies and coal miners over this year's contract price for coal is another reason that local thermal power producers have had to purchase coal overseas.

Wang Ling, analyst with Umetal.com, believes that coal imports will continue to increase in March and may drop beginning in April.

"China's coal producers may suffer a loss due to increased overseas purchase by utility companies," said Han Xiaoping, an energy analyst with Beijing Falcon Pioneer Technology Co.

Other analysts, however, believe that imported coal will not pose a threat to local coal, simply because no single coal producer has a production capacity large enough to satisfy China's rising demand.

(China Daily March 17, 2009)