Increasing power needs and high dependence on a fast depleting natural resource is upsetting the China’s coal import-export balance and driving up coal prices.
Figures from the General Administration of Customs in Beijing indicate that coal imports by China exceeded by 1.4 million tons in January 2007. Setting a record, China bought more coal than it exported and this may lead to a 42% rise in coal prices in the next five years. Though there was a brief change in February, the force working to take imports high was unstoppable, says MineWeb.
Imports by China of 14.3 million tons of coal in the first quarter of the year led to a 60.4% rise on the previous year. As per customs data, exports were at 11.42 tons, a 32% decrease from the previous year.
The Government of China expected a rise of 270 million tons over earlier year’s production, as demand may touch 2.6 billion tons. Energy-intensive industries like cement makers and the desire to avoid transport delays between mines inland and the customers saw rising coal consumption and imports in China.
Coal is the main energy resource for China that extracts 70% of its electricity from coal and even though it is the world’s top producer-consumer of coal, there is rapid increase in demand. Additionally, it is evident that in recent times, China has reached its maximum limits as far as coal-mining capacity goes. The deadly accidents in Datong, Shanxi province are pointing to the fact that existing coal-mining facilities are less than sufficient to continue safe production levels.
In 2007, China’s coal supply has showed dramatic rise but even then shortages are likely due to increase in production, expansion of transport network and macro-controls to contain demand.
A research analyst at RNCOS comments, a combination of incentives by the Chinese Government and an insufficient coal supply in the local market has ensured that more coal is imported from foreign markets. China, the world’s largest coal producer, is expected to import more coal in the next few years to maintain a steady power supply for its robust economy.
Related Market Research Reports:
China Energy Sector Analysis
Indian Coal Industry: Opportunities for Growth (2006)
Indian Coal Industry Outlook till 2012
