Oversupply drags down coal prices in China

Domestic coal prices have retreated slightly on the back of a moderate oversupply in the fragmented sector and analysts predict the downtrend will continue through 2007. Prices from major producers in resource-rich areas such as Shanxi, Shandong and Anhui provinces have slid some 30 yuan (US$3.7) to 50 yuan (US$6.2) per ton on average since July, according to industry sources.

Prices at the coal exchange centre in Qinhuangdao of North China’s Hebei Province, one of the country’s major ports for coal transportation, have fallen some 7 per cent over the past two months, a drop from 440 yuan (US$54) per ton to the current 410 yuan (US$50) per ton, Li Xuegang, president of the coal exchange centre told China Daily yesterday.

"The situation reflects a moderate surplus of coal supply, which was tight in previous years because of soaring demand for energy," Zhu Deren, vice-president of the China Coal Industry Association (CCIA) told China Daily.