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Coal Supply, Demand to Balance This Year

China's coal supply will not be as tight as last year due to rapid growth in coal production and lower demand from overheated industries reined under the central government's macro-economic control policies.

"Supply will meet the demand in general this year," reported Sunday's Economic Daily, quoting sources from a work conference of the China Coal Industry Association.

China's coal output was 1.956 billion tons last, up 17.3 percent year on year, according to the paper. The total profits of coal companies rose 113.2 percent to 30.7 billion yuan in 2004, it said.

In the first quarter of 2005, China's coal production increased 45.07 million tons to 423 million tons, a year-on-year rise of 11.9 percent, it said.

Last year, the overheated growth of steel industry and real estate strained the country's supply of coal, power and oil and put the national economy on alarm.

As the macro-control policy is taking effects, the growth of the power, steel and construction materials industries is being reined in. The demand for coal in the steel industry is dropping, the paper said.

The newspaper said the demand for power in China would be lower this year than last year, and that heavy rainfall in south China would bring more water power, which would also ease power supply in the country.

More than 1,900 cement producers, one third of the total number, were closed down last year, which should cause sharp drop of coal demand, the paper reported.

Meanwhile, over supply of coke in the market has led to closedown of many coke companies, which would also lower the market demand for coal.

Improvements to the country's railways have enhanced coal transportation potential, which will put more coal on the market instead of being detained at ports and storehouses, the newspaper said.

Coal with low calorific value will be in abundant supply this year, but the supply of high-quality coal will still be tight, it said.

(Xinhua News Agency April 11, 2005)

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