October 07, 2008

Coal price at Qinguangdao port further increases

China Securities Journal reported that coal price at Qinhuangdao Port rose by another CNY 40 per tonne to CNY 50 per tonne compared with that on June 23rd hitting new records for eight consecutive weeks.

Mr Chen Liang an analyst from Ping An Securities noted continuously rising coal price reflects coal supply shortage. He said that "There may be some speculations in response to price hikes for both coals with high and low calorific values. Tight supply indicates further price advances, and some traders may stock up resources which will worsen the short supply."

Mr Chen said coal price rise started in domestic market, followed by prices in Australia. Prices both at home and abroad went upward after May. BJ price in Australia broke USD 160 per tonne and domestic price hit record highs in two consecutive months. He said that "The main reason is short supply. Domestic price once fell in this Apr, when coal produced by mines in villages and towns increased notably. After that Australian coal price also dropped."

Mr Chen said "Although Saudi Arabia has said to increase 200,000 barrels, this figure merely accounts for less than 1% of global output. Libya is threatening to cut its output. Russia has raised export duty on crude oil for several times this year, pushing up purchasing costs to some extent."

He said that "Coal price has jumped too fast and may experience a modest retreat. He believed that coal price slide might come within a month along with oil price decline.”