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China coal prices downside space limited: China Coal chairman

China’s coal prices may have limited downward space in days to come, Wang An, chairman of China Coal Energy Co., Ltd., the country’s second largest coal producer, told reporters in late August.

"Price of 5,500 Kcal/kg NAR thermal coal should be 630 yuan/t with VAT, FOB Qinhuangdao, if profits between coal and power industries are to achieve a balance," said Wang.

"But the present price was below 430 yuan/t, and 80% of the coal firms across the country are suffering losses," he said. "At such low levels, further downside room should be limited."

Wang advised the government to coordinate and help establishing medium or long-term partnership between state-owned coal and power groups, which is helpful in stabilizing prices.

China’s four coal major producers, including Shenhua Group and China Coal Energy, should work together on price adjustments under the guidance of relevant departments, as their coal output accounts for 70% of the nation’s total coal sales via northern Chinese ports presently, said Wang.

Wang considered it necessary to convert part of the coal into chemical products in a coal-dominated energy structure, saying that the country has the ability to deal with water shortage and environmental protection problems.

China’s export coal product is losing price edge. The price of Chinese thermal coal shipped to Japan and South Korea was some $10/t higher than that of other exporters, while coking coal was nearly $30/t above.

China Coal Energy exported 180,000 tonnes of self-produced coal – all thermal coal mainly used for power generation -- in the first half of the year, down 28% on year.

source: http://en.sxcoal.com