Coal prices, after years of consistent increases, are expected to drop slightly in the second half of the year, industry experts said at the weekend. Industry experts were attending the China Coal Market Conference 2005 in Beijing.
Petroleum prices, however, rose over the weekend in line with a surge in international oil prices.
Increased production and imports were cited as possible reasons for the dip in prices. In addition, although domestic demand for coals is on the rise, particularly in highly energy-dependent industrial sectors such as steel and petrochemicals, the growth of this demand has slowed down due to tighter government controls on the steel and petrochemicals industries aimed at keeping growth manageable and viable, Guo Yuntao, director of the China Coal Industry Development Research Center (CCIDR), said.
China's demand for coal is projected to rise by some 150 million tons this year, compared with an estimated annual increase of 200 million tons in coal output for the same period, Guo said.
"Coal supplies to date, especially for the country's power generators, have seen a lot of improvement. A more balanced supply and demand situation is likely to result in lower prices," Guo added.
According to statistics from the Shanxi Coal Industry Bureau, the average coal price in major companies in the nation's largest coal-producing province dropped by 2.7 percent to 292 yuan (US$36) per ton in May compared with the figure in April.
Furthermore, changes to the tax policy encouraging coal imports while cutting exports has also enhanced domestic coal supplies.
China sold 36.4 million tons of coal overseas in the first half of the year, a drop of 18 percent year-on-year.
The government is introducing more market mechanisms to energy prices such as coal and oil.
Gasoline price hike
As crude prices continued on a bullish trend, the National Development and Reform Commission on Saturday further increased the retail benchmark price for gasoline by 300 yuan (US$37) per ton, while diesel was raised by 250 yuan (US$31) per ton.
In Beijing, the price of gasoline increased marginally, between 0.29 yuan (3.6 US cents) and 0.33 yuan (4.1 US cents) per liter.
The retail price of diesel went up by 0.28 yuan (3.5 US cents) per liter, causing a rush to fill up tanks before the price hike kicked in.
The Beijing News quoted a man surnamed Zhang as saying that he worried about the cost of driving in the future. As a result of the several price increases recently, he now has to pay an extra 10 yuan (US$1.23) each time he fills up.
Many taxi-drivers said they felt the burden of making a living had become even heavier. One said that if he drives 250 kilometers on a hot summer day with the air-conditioning on, he will use at least 25 liters of fuel. That equates to an extra 8 yuan (98 US cents) each time.
(China Daily July 25, 2005)
