China's tight coal supply will be relieved in coming months, as coal output keeps up in the second half, Wu Chenghou, Consultant of CCTS, said.

    But the regional coal supply may be tightened and coal price is expected to keep up due to seasonal demand, tense transportation and surging coal cost, added Wu.

    After the Olympics, small coalmines in Shanxi and Hebei provinces are expected to resume production and become the main force to increase coal supply. But considering safety and market fluctuation,small coal miners may restrict mining.

    China is expected to unlock construction projects of big coalmines, and speed up approval procedures for them.

    Yang Ming, economist with International Energy Agency, said that China's coal output would continue rapid growth to drive up coal production worldwide.

    If local governments continue tight control on small coalmines' safety inspection and resource integration after Olympics, coal supply will remain tight, said Chen Liang, analyst with China Merchants Securities.

    Coal output increased 14.8 percent in the first half, but this can't make up coal output reduction caused by shutting down small coalmines. The growth rate of coal output in the first half is only 6. 6 percent, far lower than that of the downstream industries.

    Despite the likely large growth of coal output in the following months of 2008, the coal price is unlikely to fall by the end of 2008.

    China's raw coal consumption this year is expected to surpass 2.79 billion tons, more than the estimated raw coal output of 2.75billion tons, so the tight coal supply will not be reversed,according to Wang Ye, top analyst of Citic Securties.

    Coal price is predicted to climb on-year 35~40 percent, and profits of coal industry up 120 percent by the end of 2008, added Wang.

    Wu said that the rising domestic demand and cost of coal production would keep coal price at a high level.

    The coal cost rises this year due to surging price of steel, cement, and power, loan interest rate lift, and newly added tax.

    Statistics show that newly added or adjusted tax in recent years accounts for nearly 30 percent of coal companies' sales earnings.

    The seasonal factor also helps boost coal demand. The coming winter will see large fall of hydropower output and higher demand for thermal power. Coal supply in China's central and southwest area maybe further tightened, and north China will increase coal demand from heating supply.

    The unreasonable charges in transportation also contribute to soaring coal price, said Wu, the coal price can hardly be pressed down unless the charges are rectified.

    According to Wu, China's ex-mine coal price in Jan.-May was 400yuan/ton, but up to 800 yuan at Qinghuangdao port. That means half ofthe coal price is generated in transportation.