Huadian Power, Huaneng Power Rise on Coal Price: Hong Kong Mover

Huadian Power International Corp. (1071) and Huaneng Power International Inc. (902) led gains among Chinese power producers in Hong Kong and Shanghai as coal prices fell.

Huadian Power, the listed unit of China’s fourth-largest power producer, rose to HK$2.11, the highest since Sept. 17, 2010, and traded at HK$2.06 as of 1:34 p.m. in Hong Kong. Huaneng Power, the listed unit of China’s largest power group, rose as much as 7.4 percent to 6.36 yuan, the highest since May 18, 2011, in Shanghai. Hong Kong’s benchmark Hang Seng Index gained 0.3 percent; the Shanghai Composite Index rose 1 percent.

Coal prices at Qinhuangdao, which delivers half the nation’s seaborne coal, fell to a range of 745 yuan to 760 yuan a ton as of June 10, the lowest in almost 20 months, according to data from the China Coal Transport and Distribution Association. Stockpiles at the port surged to 8.83 million tons, the highest level since Nov. 25, 2008, according to the association’s data. Chinese power producers rely on coal to generate three-quarters of the nation’s electricity.

“Power generators can immediately benefit from lower coal prices as many of them are stocking up coal stockpiles for the summer peak season,” said Shi Yan, a Shanghai-based analyst at UOB-Kay Hian Ltd.

The National Development and Reform Commission, China’s economic planner, said most public hearings on electricity pricing reform have supported the proposed three tiers of pricing mechanism, according to a statement posted to its official website today.

“The news NDRC will adjust the electricity pricing system has also been taken positively by investors,” Shi said.

Electricity users will be required to pay a higher price when their consumption crossed thresholds of different tiers, according to the draft plan, which NDRC calls “fair” to both power generators and consumers.

To contact the reporter on this story: Aibing Guo in Hong Kong at aguo10@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net

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