China Coal First-Half Profit Increases 59% on Prices
China Coal Energy Co., the nation’s second-largest coal producer by sales, said first-half profit rose 59 percent on increased output and prices.
Net income surged to 4.22 billion yuan ($617 million) from 2.65 billion yuan a year earlier, the Beijing-based company said in a statement to the Shanghai Stock Exchange today, citing international accounting standard. Sales climbed 57 percent to 26.6 billion yuan.
Coal producers in China, the largest user of the fuel, have boosted capacity as the country struggles with its sixth year of power shortages. The government last week ordered a cap on prices of the fuel to help utilities cope with rising fuel costs.
“The government’s coal price caps will affect the company’s operation,” China Coal said without elaborating.
China Coal rose 0.3 percent to HK$14 in Hong Kong trading today before the results announcement. The shares have fallen 43 percent this year, compared with an 18 percent decline in the city’s benchmark Hang Seng Index.
Production rose 15 percent to 49.98 million metric tons in the first half, China Coal said. Prices climbed 34 percent from a year earlier to an average of 455 yuan a ton during the period, it said. Prices for power station coal rose by 22 percent to 430 yuan a ton, while those for coking coal used by steelmakers rose 37 percent to 879 yuan a ton.
Record Prices
Coal prices at Qinhuangdao reached a record $154 a metric ton in May after the government closed small mines to cut pollution and ensure safety before the August Olympics.
Insufficient supplies have forced the closure of 2.5 percent of the nation’s coal-fired power plants, State Grid Corp. of China said on July 7. Restrictions on transporting hazardous materials near Olympic venues disrupted output, Zhang Wenjiang, assistant general manager of Shenhua Group Corp., said July 17.
China Coal plans to more than double capital spending this year to 16.2 billion yuan to tap rising demand. It will increase production by 15 million tons a year in the next three years, Chairman Jing Tianliang said in April. The company boosted production 14.5 percent last year to 90.52 million tons.
China Coal plans to sell 25 percent of its coal in the spot market this year, compared with 18 percent in 2007, President Yang Lieke said April 10.
Asian coal prices have more than doubled this year on rising electricity demand and as railroad and port bottlenecks in Australia and South Africa curb supplies.
Tags: coal, Shenhua