Some coal prices rose by 5%
January 15 marked the deadline for the "Development and Reform Commission's determination to complete the signing of the 2013 electric coal contract." However, many electric coal companies have yet to reach an agreement on pricing, with most contracts being quantitative rather than based on price. The coal price remains a key point of negotiation.
Despite this, coal companies such as Luan Group, Datong Group, Shenhua Group, and China Coal Group have finalized their prices for 2013, which are approximately 5% higher than those in 2012. This marks a significant shift as 2013 is the first year since the cancellation of coal price controls, leading to a more market-driven approach.
The transition to the new coal mechanism has created a competitive environment between power companies and coal producers. With thermal coal prices continuing to decline and increased competition from imported coal, analysts predict that coal supply agreements this year may be lower than last year.
As of January 15, the national coal production, transportation, and demand summary has reached 830.43 million tons. While the coal contract process is still ongoing, many companies are currently focusing on quantity rather than price. Most coal prices remain unannounced, with official figures expected to be released after January 18.
Experts note that power companies have a stronger position due to high stockpiles and a relatively loose supply-demand balance, making it difficult for coal companies to push for price increases. Some power groups have already agreed on fixed pricing methods for 2013, rejecting the floating price proposals from coal companies.
Analysts like Yin Xilong from Guotai Junan Securities believe that the average spot coal price in 2013 will be significantly lower than in 2012. This is due to uncertain economic recovery and continued pressure from imported coal. Meanwhile, domestic coal companies are likely to face strong resistance from downstream power companies when seeking price hikes.
Dai Bing, an analyst at Treasure Island, reported that prices for long-term thermal coal and coal-based contracts are currently set around RMB 10–20 per ton, with some major companies seeing a 5% increase. Despite this, most parties are still focused on quantities rather than final pricing.
Li Ting from the China Business Center Productivity Promotion Center noted that if price disagreements persist, power companies could choose not to sign contracts and instead purchase coal at market prices. Market coal lacks the guarantees of contract coal, giving power companies more flexibility.
On January 16, the average price of 5,500 kcal thermal coal in the Bohai Rim region closed at 633 yuan/ton, down by 2 yuan/ton from the previous period. Analysts attribute this decline to rising imports and high port and power plant inventories, which are not sufficient to support downstream demand.
With the new coal mechanism still adapting, traders are taking a cautious approach. Short-term demand from downstream sectors remains weak, and the downward trend in thermal coal prices is unlikely to reverse soon. Additionally, the increasing volume of imported coal continues to impact the domestic market.
According to data from China Customs, total coal imports in 2012 reached 290 million tons, up 59% compared to 2011. As the U.S. reduces its coal consumption due to shale gas, global coal exports are surging, further affecting the Chinese market.
Peng Jingang from China Merchants Securities believes that the sluggish global economy and weak energy demand will keep imported coal at high levels for the next few years, putting further pressure on domestic coal prices. As a result, power companies hold a stronger bargaining position, while coal enterprises remain in a weaker position.
Dai Bing predicts that this year’s coal consumption under signed contracts will be lower or equal to last year’s. Southern coastal power plants may also consider using more imported coal, which offers cost advantages and better fulfillment rates.
supply valve,nitrogen supply,Self-operated supply valve,Self-operated nitrogen supply,supply valve Self-operated,nitrogen supply Self-operated
Jiangsu Tanggong Automatic Control Equipment Co., Ltd. , https://www.tgcontrolequipment.com