China sees fall in coal prices

China sees fall in coal prices

Coal prices in China have fallen in August due to increasing inventories at the country's ports and a change in the supply-demand situation. Beijing's macro-economic measures, transportation bottlenecks, lower export tax rebates on coal, and a decrease in investments in high-energy consuming projects in the iron and steel sector have all led to the increase in coal inventories at the nation's ports. The country has been trying to eliminate the high inventories, but to no avail. China's Ministry of Commerce anticipates slight declines in coal prices, while the China Coal Industry Development Research Center predicts that prices may slide as much as 15 percent before the year is out. Recent government crackdowns on the domestic coal industry, which is rife with illegal producers, has seen the country turn more towards imports to meet raw material needs. The fact that the price of imported coal is decreasing towards the level of domestically produced coal will only further entice consumers to prefer imported coal. This, combined with recent drops in exports, will continue to exert downward pressure on coal prices. According to China's customs statistics, coal exports of the country stood at 5'657'000 mt level in July. Total coal exports through January-July 2005 show a 18.7 percent year on year decline to 42'418'000 mt. On the other hand, coal imports in July reached 2'841'000 mt hitting the ever highest record as imports in a single month. Consequently, total coal imports during January-July 2005 reached 14'948'000 mt, up 55.4 percent year on year.