Industry leader says coal market will warm up in August

China's coal market, which has been suffering from high inventories and dramatically falling prices since May, will improve in late August, Wang Guangde, vice-president of China National Coal Association, said on Thursday.

Thermal coal demand increased in July, as electricity consumption goes up in the summer, which reduced the pressure on coal producers and traders.

National coal output reached 296.92 million metric tons in June and analysts estimated that the year-on-year growth rate of coal output this month will continue to decline.

"It is possible that coal prices will stop falling and stabilize in August," said Dai Bing, a senior analyst at the coal trading website coal.com.cn.

He said that coal price declines at major ports in northern China were smaller, which is a good sign.

To better serve coal traders and solve their financing difficulties, the website launched an online spot coal trading platform with logistics services on Thursday.

Up to 100 companies had started trading on the platform by Thursday afternoon.

The website spent 20 million yuan ($3.2 million) on infrastructure construction and will spend 50 to 80 million yuan on a logistics center with the capacity to store 50 million tons, and transportation services, said Dai.

Most coal traded on the platform will come from the Inner Mongolia autonomous region, and Shanxi and Shaanxi provinces, he said.

"The fast development of the coal industry in western China has provided good opportunities for domestic energy companies," said Fan Hengshan, director of the Regional Economy Department of the National Development and Reform Commission.

"The online trading platform should better serve places in the western area, too."

Xu Shaohui, a representative of the trading platform, said it will charge 0.1 to 0.3 percent commission for each ton traded.

However, some industry insiders said the sustainability of the coal trading platform depends on how it operates, and this type of online trading remains in its infancy in China.

China imported 27.19 million tons of coal in June, up 59 percent year-on-year, according to customs data.

Dai said that in such a situation, the major coal producing provinces experienced falling sales and profits in the first half of the year.

"The major reason is that the drop in imported coal prices is faster than that of domestic coal," he said.

"Thus, it is helpful to provide another coal trading channel for domestic coal traders."

dujuan@chinadaily.com.cn

(China Daily 07/27/2012 page14)