Coal prices rise

Just a few days ago China's electricity giants and coal producers gathered in Guilin, South China's Guangxi Zhuang Autonomous Region, to sign this year's electricity coal supply contracts.

The recent gathering is the first after the government scrapped its previous coal procurement meeting. Unlike meetings in the past, electricity companies agreed to increases in coal prices without traditional tough negotiation.

Some analysts said the rapid development of the nation's electricity industry has meant power companies need more coal to fuel expansion, and are not in a position to take a tough stance.

And electricity consumption is certainly on the rise. Datang International Power Generation Co Ltd, one of the five main power companies in China, says the company produced 93.5 billion kilowatt-hours of electricity in 2006, an increase of 31.65 percent over 2005.

The rising price of coal is in part due to environmental and safety factors that have been included in overall cost calculations, said analysts.

"The coal price rise in China will be a gradual process," said Jiang Zhimin, vice-chairman of the China National Coal Association, "and the nation should further improve its coal pricing system to make it more market-oriented."

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