22 Dec 2010 11:39

China to face tight coal supplies in Q1 2011- experts

By Li Xin

Beijing. December 22. INTERFAX-CHINA - China's coal supplies are expected to tighten during the first quarter (Q1) of 2011 despite a comparatively abundant inventory, industry experts said at a forum in Beijing on Dec.21.

Yang Xianfeng, vice chairman of China Coal Transportation Sale Society (CCTS), said at the 2011 Ocean Shipping Coal Forum that of China's 218 million tons of coal inventory at the end of November, 40 million tons were kept by key coal production enterprises, 59.58 million tons by power generation companies and 22.34 million tons stockpiled at major ports.

As the first year of Twelfth Five-Year Plan period, 2011 is expected to see a boost in fuel demand from various sectors, particularly during Q1, Yang said.

Yang expects coal demand to increase early in 2011, citing China's Spring Festival in February, the peak period for heating demand and coal transportation.

Xie Juchen, a power fuel expert and former general manager of Zhong Neng Power Industry Fuel Co. Ltd. noted that power generation companies' coal inventory stood at 56.90 million tons as of Dec.19.

According to Xie, a forecasted lack of rain in Q1 may also heighten supply concerns. During Q3 of this year, abundant rainfall boosted hydropower generation by 30 percent year-on-year and reduced coal consumption over the period, he said.

Yang noted that China's 2010 coal supply and demand as a whole was generally balanced due to an expanded production capacity in several regions. He said that production growth rates in Shanxi, Shaanxi, Ningxia and Guizhou Provinces all stood at over 20 percent during the first eleven months of the year.

China's coal supply is expected to stand at 3.4 billion tons while demand is projected to hit 3.3 billion tons for the whole of 2010, Xie said. Of the supply, Xie noted that 3.25 billion tons were domestically produced and 145 million tons were imported.

According to CCTS statistics, China exported 17.58 million tons of coal in the first eleven months, down by 13.5 percent year-on-year. Yang expects that the country will have exported 19 million tons of coal during 2010.

Experts have agreed that coal demand in 2011 would increase at a slower pace as the country experiences economic restructuring in the face of pressure to conserve energy and reduce carbon emissions. Efforts to curb the development of high energy consuming industries are also expected contribute to the slowdown, Yang noted.

Despite these figures, 2011 is still expected to see a boost in coal supply capacity. Yange noted that newly-increased coal production next year is expected to amount to 300 million tons. Furthermore, increasing exports from Australia, Indonesia, Russia and Vietnam and the operation of new railway lines will also help push up supply and increase shipments from Shanxi and the Inner Mongolia Autonomous Region, according to Yang.