SHANGHAI Aug 5 China Shenhua Energy Co Ltd
, the country's top coal miner, has raised its August
coal prices after two consecutive months of cuts, trade sources
said on Tuesday, in a move that may offer some relief to an
industry suffering big losses.
The price hike by Shenhua comes as more than 70 percent of
China's coal firms are already making losses in the first half,
according to the country's coal association, with prices eroded
by falling demand growth, a worsening supply glut and a war on
Shenhua raised prices for benchmark coal with heating value
of 5,500 kcal/kg by 4 yuan to 489 yuan ($79.25) for August,
while its tier-1 quality coal (5,800 kcal/kg) was unchanged at
535 yuan a tonne, traders said.
"We're about to enter a seasonal demand lull and orders will
start to fall by mid-August. If the big boys don't find ways to
support the market, prices will drop further and the outlook
will be very, very grim," said a Shanghai-based trader.
Hit by persistent oversupply and slackening demand, China's
benchmark thermal coal prices have been steadily falling since
the start of the year and are now hovering at their lowest in
more than six years, putting more and more miners under duress.
Taking the lead from the industry leader, China National
Coal Group, the country's second-largest producer, swiftly
followed suit and hiked prices by a similar amount for August
delivery, industry website China Coal Transport and Distribution
Association (CCTD) reported on Tuesday.
Shenhua and China Coal could not be reached for comment.
Traders said the brief increase in spot demand from power
plants during the searing summer would offer a reprieve for
miners, with industry data from CCTD showing that average daily
coal consumption by major coastal power plants has risen to
about 700,000 tonnes from about 600,000 tonnes in mid-July.
Stocks at these major power plants have also fallen to an
equivalent of 18 days of consumption, compared to 20 days
"Local prices should increase, or at least stabilise, now
that the top miners have started to raise prices. But I'm not
expecting any big rebound," said a second coal trader.
Analysts said the overall outlook for miners remain bleak
unless steps were taken to cut production to allow swollen
inventories to be digested.
Total coal inventories in China have hovered at around more
than 300 million tonnes for 2-1/2 years, while unsold stocks at
mines rose to a record high 99 million tonnes at the end of
June, according to data from CCTD.
To tackle the supply glut, the coal association has proposed
a series of plans aimed at cutting output by around 10 percent
this year, local media reported.
Proposals include having miners register their monthly
production, authorities stepping up checks on output and safety,
and increased fines on firms that are producing above their
($1 = 6.1705 Chinese Yuan)
(Reporting by SHANGHAI newsroom and Fayen Wong; Editing by