Coal imports in the first quarter of this year exceeded exports for the first
Fuelled by a need to power its robust economy, the world's largest coal
producer is expected to import more and more coal in the near future.
As the need for coal grows, China might see a rise in prices within the next
two years despite them rising sharply last year, experts said.
The country imported 14.3 million tons of coal in the first three months of
this year, a year-on-year rise of 60.4 percent. Meanwhile, it exported 11.42
million tons, a 32-percent drop from last year, according to customs figures.
"China may see a pure coal import this year and the domestic coal price has
room for further inflation," Zhao Jianian, deputy secretary-general of the Coal
Industry Economic Research Association, said.
But Zhao expects the coal price will only rise "moderately" given the fact
that unlike the oil industry, the coal industry only wins a poor profit edge.
Xiao Hanping, an analyst with Galaxy Securities, said that expanding domestic
demand might generate a price hike that was "impossible to evaluate at present".
The current price, of about 500 yuan ($64) per ton, has already reached a
peak after a 15-percent rise last year, Zhao said. But imported coal costs about
$63 per ton.
Experts said the government's latest policies aimed at regulating the
accident-plagued coal industry and protecting domestic energy resources have
tipped the previously abundant coal market.
The country has streamlined its coal mining industry since last year by
closing thousands of small-scale mines. As a result, there will be total
production loss of 380 million tons through 2010.
Suspending the approval of coal mine projects has led to a sharp decline in
the fixed asset investment in the industry, with the investment growth dropping
from 65.6 percent in 2005 to 27.2 percent in 2006 and 2.3 percent in the first
two months of this year.
The regulative policies have also lifted the cost of coal production, as coal
producers are required to shoulder the environment and social costs of their
Additionally, to discourage coal exports and make the most use of foreign
resources, the government has also scrapped tax rebates and now levies export
duties on coal.
National statistics show that China produced 2.38 billion tons of coal in
2006 and consumed 2.37 billion tons, promoting a balanced market.
But with the country's GDP slated to grow at an average of 9 percent through
2010, coal consumption is expected to reach 2.87 billion tons in 2010, 270
million tons more compared with the 2.6 billion tons production scale planned.
But experts refuted the suggestion that domestic demand might generate an
international coal price hike.
China's imports of coal have grown since last year, a sharp reversal of the
country's previous image as the world's second largest coal exporter in 2003.
Last year, it exported 63.3 million tons of coal, down 11.7 percent from
2005, a decrease for the third consecutive year. Imports were 38.25 million
tons, up 46.1 percent, according to the General Administration of Customs.
Sources said 84.1 percent of the imports came from ASEAN and Australia, and
24.18 million tons went to private companies.