The coal supply in China will remain stable even during the electricity demand peak in the coldest season of the year.
China's coal storage at power generation companies' coal plants totaled 125.7 million tons in the week ended Jan. 2, up by 18.7 million tons from a year earlier and maintaining a relatively higher inventory than in the past two years, according to the China Electric Coal Index. Coal prices remained stable in the period.
This year's medium- and long-term agreements for coal to generate electricity kept the same framework as last year but relaxed some requirements for coal-producing regions and companies. For example, the minimum production volume for coal enterprises was lowered to 75 percent of their total resources this year from 80 percent last year.
The supply and demand relationship in the Chinese coal market is generally balanced and will probably remain like this throughout this year, Zhang Feilong, director of the Yimei Research Institute, told Yicai.
On the supply side, coal production in major producing regions continues to rise, and coal imports have reached record highs, enhancing the overall coal supply, Zhang noted. On the demand side, temperatures have been warmer than usual this winter, and demand from the construction materials sector has entered a traditional low season, leading to sustainable inventory levels.
Domestic coal production is expected to increase about 1.5 percent this year from the previous one, while imports will likely decline, Zhang predicted. Meanwhile, electricity demand is forecast to jump by a percentage close to the gross domestic product growth of around 5 percent, he said, adding that prices may continue to fall to around CNY700 (USD95.50) per ton from over CNY800 per ton.
Coal remains the foundation of China's power generation in the foreseeable future despite the installed capacity for new energy sources, such as wind and solar power, has surged, as their intermittent and volatile nature still results in gaps between the installed capacity and actual power generation, said Lin Boqiang, director of the China Institute for Studies in Energy Policy at Xiamen University.
Given China's economic growth targets and social electricity demand, coal consumption is expected to remain in a reasonable range this year, without excessive growth beyond expectations, Lin noted, adding that no drastic actions will likely be taken to meet binding energy-saving and carbon reduction targets.
（Picture: Veer）
