A power plant in Beilun, Zhejiang province under China Guodian Group. [China Daily]
China's five leading power companies have failed to reach an agreement with coal miners on next year's annual supply contracts as they are unwilling to concede the miners' demands for higher prices.
The country's five biggest power-generating companies had sought a 50 yuan per ton price cut from the term prices in 2008. The coal miners were, however, adamant that prices should be raised, said sources who attended the annual coal contract negotiations for 2009.
The top five power companies are China Huaneng Group, China Datang Corp, China Guodian Corp, China Huadian Corp and China Power Investment Corp.
Coal companies were set to sell 840 million tons to power producers at the annual coal contract negotiations. However, only about half of the coal offered by the miners was sold, said an official with China Coal Transport and Distribution Association, who declined to be named.
Talks on coal supplies for metallurgic and chemical industries, on the other hand, have been successful, said the official.
China's power generators are not unduly worried over fuel supplies next year as they have adequate coal stocks and the railway capacity is abundant, said an analyst who asked not to be named.
Sources said China's power generators have a record 50 million tons of coal stockpiles due to the reduced electricity demand. This is considered to be more than enough to meet a month's consumption.
"Coal prices will not see big rise in the next year, as the global financial crisis has resulted in a slowdown in China's energy demand," said Han Xiaoping, energy analyst, Beijing Falcon Pioneer Technology Co.
"Power producers are confident that spot coal prices would continue to fall next year," he said.
China will face a temporary energy glut because of dwindling demand in the global financial crisis, said Wang Siqiang, an official with the National Energy Administration at a recent meeting.
China's power companies may incur 70 billion yuan losses this year due to rising fuel costs and lackluster electricity demand, said an official with China Electricity Council, the industry association.
Electricity output dropped 9.6 percent in November, the second consecutive month of decline.
Prices of coal for immediate delivery almost halved to 610 yuan a ton as of Dec 29 at Qinhuangdao port, a Chinese benchmark.