A national coal trade fair finally concluded last week in
Qinghuangdao, Hebei
Province, but a dispute concerning pricing continues.
The trade fair, which was due to close on January 5, had been
extended for a week. Industry insiders said that the number of
deals secured were far fewer than expected, though the organizers
have not as yet released precise figures for the fair's trading
volume or contractual sums.
"The event aimed to resolve coal shortages for thermal power
plants, but the fundamental problem remains," a senior executive of
an undisclosed energy firm told 21st Century Business
Herald, a Guangdong-based newspaper.
The source also revealed that their contractual coal supply was
only half the quota guaranteed by government.
The forerunner of the trade fair was a national coal ordering
fair, held for 40 consecutive years. An average of 800 million tons
of coal are traded at the annual fair with contractual sums nearly
reaching 200 billion yuan (US$24.16 billion). Supplies for thermal
power plants are a major trading item.
Currently, the government is preparing to withdraw intervention
in coal supply, transportation and pricing. Ou Xinqian, vice
minister of the National Development and Reform Commission, said at
the opening ceremony that the government plans to reform the event,
and that companies need to negotiate final prices with each
other.
In December, the commission proposed to link coal and power
prices, and won approval from the State Council, China's cabinet.
The government hopes such a price linkage mechanism will enable the
once tightly controlled electricity tariff to fluctuate in line
with coal prices within a range of eight percentage points, easing
longstanding friction between the two industries over prices.
Neither side is satisfied with the proposed mechanism; coal
firms say the price would still be too low, while power firms want
to keep prices within five percentage points of the benchmark
figure.
Prices at the trade fair already exceeded the proposed eight
percentage points. A local official said that some contracts had
only specified trading volumes, so power and coal companies still
need to settle prices.
China, which is troubled by power shortages, has increased
numbers of power plants and this has in turn increased the demand
for coal.
According to the State Administration of Work Safety, 3,639
fatal coal mine accidents were reported last year, claiming the
lives of 6,027 miners.
(China.org.cn by Tang Fuchun January 19, 2005)