A national coal trade fair finally concluded last week in Qinghuangdao, Hebei Province, but a dispute concerning pricing continues.
The trade fair, which was due to close on January 5, had been extended for a week. Industry insiders said that the number of deals secured were far fewer than expected, though the organizers have not as yet released precise figures for the fair's trading volume or contractual sums.
"The event aimed to resolve coal shortages for thermal power plants, but the fundamental problem remains," a senior executive of an undisclosed energy firm told 21st Century Business Herald, a Guangdong-based newspaper.
The source also revealed that their contractual coal supply was only half the quota guaranteed by government.
The forerunner of the trade fair was a national coal ordering fair, held for 40 consecutive years. An average of 800 million tons of coal are traded at the annual fair with contractual sums nearly reaching 200 billion yuan (US$24.16 billion). Supplies for thermal power plants are a major trading item.
Currently, the government is preparing to withdraw intervention in coal supply, transportation and pricing. Ou Xinqian, vice minister of the National Development and Reform Commission, said at the opening ceremony that the government plans to reform the event, and that companies need to negotiate final prices with each other.
In December, the commission proposed to link coal and power prices, and won approval from the State Council, China's cabinet. The government hopes such a price linkage mechanism will enable the once tightly controlled electricity tariff to fluctuate in line with coal prices within a range of eight percentage points, easing longstanding friction between the two industries over prices.
Neither side is satisfied with the proposed mechanism; coal firms say the price would still be too low, while power firms want to keep prices within five percentage points of the benchmark figure.
Prices at the trade fair already exceeded the proposed eight percentage points. A local official said that some contracts had only specified trading volumes, so power and coal companies still need to settle prices.
China, which is troubled by power shortages, has increased numbers of power plants and this has in turn increased the demand for coal.
According to the State Administration of Work Safety, 3,639 fatal coal mine accidents were reported last year, claiming the lives of 6,027 miners.
(China.org.cn by Tang Fuchun January 19, 2005)
