China's top five power generating groups have signed 2009 coal supply contracts with miners in Guizhou Province and Xinjiang Uygur Autonomous Region, with prices up 4 percent on the year, or flat after tax effects, sources said Thursday.
The price increase is in line with deals signed earlier in Shandong and Henan provinces, said the sources, including an executive at one of the power producers and a power industry official, both with knowledge of the negotiations.
The tonnage contracted, estimated at more than 100 million tons, accounts for up to 20 percent of the total annual coal consumption at these companies, the sources said.
"We've signed some contracts in certain regions, but deals with most of the expected regions are still up in the air," said the power company executive.
The industry official said the top five firms might sign annual deals for 200 million to 300 million tons in all.
The top five state-owned power groups - Huaneng, Datang, Guodian, Huadian and China Power Investment - have been in talks with coal producers since December last year to try to agree on contract prices.
The absence of a deal within China and the slowdown in demand overseas helped drive Chinese imports of coal to a record high in April, the last month for which data is available.
After the Henan and Shandong deals, analysts at Nomura Holdings Inc said they expected the price to spread to the rest of China.
"We believe the rest of the coal miners in China may take the prices they have negotiated as benchmarks to finalize coal contracts in other provinces," Nomura said in a note to clients on June 5.
(Shanghai Daily June 12, 2009)
