China's power coal price ended falling at the end of August and is expected to gain moderate rise in the remaining months of this year upon demand from seasonal heating supply and power plants.

    The coal price of Qinghuangdao, China's major coal port, halted diving last week (Aug.25- Aug. 29), with Datong quality mix (refering to coal of 6,000 kcal/kg) at 940-1,010 yuan/ton, and Shanxi quality mix (refering to coal 5,500 of kcal/kg) at 860-930 yuan/ton, showed the statistics from the China Coal Trade & Development Association (CCTDA).

    In the first half of July, China's coal price kept soaring due to tight coal supply despite government's interim price interference. By the mid-July, the exit price of Qinghuangdao power coal (refering to coal of 5,500 kcal/kg) had climbed to 1,010-1,040 yuan/ton, up 130 yuan/ton over the end June.

    By the end of July, the China's price regulator National Development and Reform Commission (NDRC) required major coal ports again to set the capping price of power coal at final settlement on June 19. Since then, surging coal price in China's major ports has been curbed and started to drop in the following month.

    Meanwhile, the coal turnover at China's major ports decreased, with shipping volume of July down 3.853 million tons from June. By the mid August, the coal stock at Qinghuangdao port and Guangzhou port amounted to 7.17 million tons and 2.13 million tons, respectively, up 3.4 and 1.04 million tons over that a year earlier.

    The coal keeps piling up at the ports while some power plants are running with tight inventory, which indicates wait-and-see attitude of the market and inadequate coal stock on the whole, said Zhang Shun, an analyst with Bohai Securities.

    One reason for the wait-and-see attitude is the price fluctuation on international coal market. As Indonesian government halted six major coal companies from exporting coal in July and China raised export tariff on coal in August, the international coal market got tightened, leading to price rise on international coal market, said Wang Shuai, an analyst of Oriental Securities.

    As winter is approaching, the coal turnover will increase and the stock will be reduced for heat supply, according to Liang Dunshi, Deputy Secretary of CCTDA.

    The coal demand of power plants is also expected to go up in the months to come as high expectation for power price raise may stimulate power plants to increase power output.

    Since July, NDRC has raised on-grid power price twice to ease the pressure of power companies.

    The on-grid power price needs to be lifted by another 0.04 yuan/kw to retain power companies' profits of 2009 at the level of 2007, said Zhang Long, an analyst with Essence Securities. The readjustment of sales price is expected to come soon upon CPI decline after Olympics, predicated an energy expert of Xiamen University.

    But the coal price would not go up by large margin, said Liang Dunshi.

    As energy-efficient measures are carried out and alternative energy is developed, China's demand for coal can be met with the present coal supply, according to Huang Teng, a coal expert.

    The shipping fare's slide is another factor to suppress coal price rise. Since mid-May, the shipping fares of coal have dived. The following table is the shipping fares of coal in China's main ports by the end of July.