China’s energy outlook

The tight supply of coal, oil and other energy products in China will ease somewhat in 2006, according to a report titled 2006 China and World Economy Development Report released by China ’s State Information Center . The report also forecasts that due to slower growth of fixed asset investment, the performance of industries dependent on capital investment such as iron and steel, engineering machinery, cement and glass industries is unlikely to see a turnaround within a short period, while the real estate market will recover gradually and the motor vehicle output and sales will increase some 12 per cent in the new year.

For coal, the output is predicted to reach 2.21 billion tons in 2006, up 6 per cent over 2005, while the apparent consumption will be 2.18 billion tons, up about 8.8 per cent. As a sharp coal price hike is unlikely, the gross profitability and profit rate of the coal industry will slide moderately in 2006. But the report says rise is a long-term trend for coal price.

The country’s electric power supply is expected to increase 12.1 per cent year on year to 2.78 trillion kWh in 2006, while the nationwide social electricity consumption is estimated to increase 11.8 per cent to 2.75 trillion kWh.