Coal-price cap to keep power on
China, the world’s biggest coal user, yesterday ordered a cap on prices of the fuel to help power producers cope with costs as the country battles a sixth year of electricity shortages, Bloomberg News reported.
Prices at the country’s biggest coal ports, including Qinhuangdao, Tianjin and Tangshan, can’t rise beyond the June 19 levels, the National Development and Reform Commission said on its Website yesterday.
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.
Prices at Qinhuangdao reached a record US$154 a metric ton in May after China ordered the closure of small mines to cut pollution before the Olympics.
The nation uses coal to generate 80 percent of its power.
“The price curbs may reduce imports and discourage smaller companies from boosting output, worsening the supply shortage,” said David Fang, a director of information at the China Coal Transport and Distribution Association. The curb will “to some extent” help power companies reduce fuel purchasing costs, he said.
China’s power plants have been losing money because of rising coal prices and government controls on electricity tariffs. Yesterday’s announcement sent the share prices of power utilities higher while those of coal producers fell.
Datang International Power Generation Co shares rose 0.4 percent to a one-month high in Hong Kong, while Huadian Power International Corp climbed 3.2 percent, the biggest gain in two weeks. China Shenhua Energy Co, the nation’s biggest coal supplier, fell 4.9 percent in Hong Kong. China Coal Energy Co dropped 3.6 percent.
Tags: coal, power