China’s Net Coal Imports Jump on Overseas Purchase

By Winnie Zhu

March 16 (Bloomberg) -- China, the world’s largest coal producer and user, increased net imports of the fuel to the highest in at least four years in February after power producers boosted overseas purchases on lower costs.

Net coal purchases rose to 3.44 million metric tons after imports climbed 73 percent to 4.88 million tons and exports fell to 1.44 million tons from a year earlier, according to data released by the Customs General Administration of China in Beijing today.

Chinese power companies are buying overseas coal as benchmark prices fell to $62.10 a metric ton in the week ended March 13 at Australia’s Newcastle port, compared with an average of $129 a ton in 2008. Imports have risen as talks on annual supplies from domestic coalminers have been deadlocked since December because of disagreements over price.

“Falling international coal prices have prompted Chinese utilities to increase overseas purchases,” Wang Shuai, chief coal analyst with Orient Securities Ltd., said by telephone in Shanghai today.

Three Chinese power producers bought 390,000 tons of coal from Russia and Indonesia, the Shanghai Securities News said Feb. 17.

Datang International Power Generation Co. is in talks to buy less than 1 million tons of coal from Australian suppliers, Chairman Zhai Ruoyu said Feb. 19.

The coal price at Qinhuangdao port, a benchmark for China, was unchanged at 557.5 yuan ($81.50) a ton as of March 16, compared with a week earlier, according to the China Coal Transportation and Distribution Association. The Qinhuangdao coal price has fallen from a July record of 995 yuan a ton.

“Given recent weak spot prices, we don’t think the 2009 contract price will rise from last year’s level,” Wang said.

Chinese coalminers aimed to charge power producers 10 percent more for the fuel under the 2009 annual contracts while power producers wanted a price cut of as much as 10 percent as electricity demand has fallen, Xie Juchen, a fuel purchasing director at China Electricity Council, said in December.

To contact the reporter on this story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net;