Coal price likely to dip in second half
(China Daily)
Updated: 2005-07-25 08:38

Coal prices, after years of going up, are expected to drop slightly in the second half of the year, said industry experts over the weekend.

Petroleum prices, however, rose over the weekend in line with the rise of oil prices on the world market.

Reasons for the possible fall in coal prices include increased production and imports. Plus, more demand could be a factor since the nation's tightened controls of its highly energy-dependent industrial sectors such as steel and petrochemicals have taken effect, said Guo Yuntao, director of the China Coal Industry Development Research Centre (CCIDR), speaking at the China Coal Market Conference 2005 on Saturday.

China's demand for coal is projected to rise by some 150 million tons this year, compared with an estimated annual increase of 200 million tons in coal output for the same period, said Guo.

"The market situation shows coal supplies to date, especially for the country's power generators, have seen a lot of improvement. The more balanced supply and demand in the coal market is likely to result in lower prices," Guo said.

According to statistics from the Shanxi Coal Industry Bureau, the average coal price in major companies in the nation's largest coal-producing province dropped 2.7 per cent to 292 yuan (US$36) per ton in May compared with the figure in April.

Furthermore, the country's tax policy change to encourage coal imports while cutting exports has also enhanced the domestic coal supply.

China sold 36.4 million tons of coal overseas in the first half of the year, a fall of 18 per cent year-on-year.

The government is introducing more market mechanisms to energy prices such as coal and oil.

Gasoline price hike

As crude prices still maintained a bullish trend in the market, the National Development and Reform Commission on Saturday further increased the retailing benchmark price for gasoline by 300 yuan (US$37) per ton, while for diesel it was raised by 250 yuan (US$31) per ton.

Retail prices went up accordingly. In Beijing, the price of gasoline increased by a margin of between 0.29 yuan (3.6 US cents) and 0.33 yuan (4.1 US cents) per litre.

The retail price of diesel went up by 0.28 yuan (3.5 US cents) per litre, causing some drivers to fill up their cars before the prices changed.

The Beijing News quoted a man surnamed Zhang who owned a car and worried about the cost of driving in the future. After the price increases, he will pay another 10 yuan (US$1.23) each time he refuels.

Many taxi-drivers said they felt the burden of making a living had become even heavier. One said that if he drives 250 kilometres on a hot summer day with the air-conditioning on, he will use at least 25 litres of fuel. So, now he will pay an extra 8 yuan (98 US cents).

"With the fierce competition in the taxi industry, increasing gas prices is like 'adding fuel to the flames' for our business," the taxi driver said.

International oil prices rose sharply recently, but domestic oil still costs less than imported crude oil. In order to guarantee the supply of domestic oil and improve energy efficiency, China decided to raise prices, an official of the State Development and Reform Commission said to Xinhua News Agency.

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