Soaring coal prices set to hit power generators (2)

11:55, October 27, 2010      

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Coal consumption is expected to increase as cold weather creates more demand for heating.

The National Energy Administration (NEA) also said on Monday that China's power consumption will slow in the fourth quarter and coal supply is generally adequate because of the growth in factory production easing.

Coal imports will grow by 16 percent from last year's figure to 120 million tons, according to the NEA.

Major power producers including Huaneng, Huadian, Datang and China Resources also reported a 20 percent growth in power generation so far this year, indicating more pressure from fuel costs.

The National Development and Reform Commission has recommended an increase in on-grid tariffs of coal-fired power plants in seven provinces by 15 to 25 yuan a megawatt-hour last month, during a meeting with representatives from the five biggest power producers in China.

As China's consumer price index (CPI) hit 3.6 percent in September and is expected to continue rising in October, an increase in power tariffs will translate into further hikes in the CPI.

International coal prices also remain at high levels and these are unlikely to offset domestic pressure through imports, said industry analyst Song Zhichen from China Investment Consulting.
Source: China Daily
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