Chinese power-station coal fell to the lowest price in almost four years as the nation’s manufacturing shrank for the first time in seven months and hydropower output increased.
Spot coal with an energy value of 5,500 kilocalories per kilogram at the port of Qinhuangdao, the benchmark grade for the country, slid to a range of 600 yuan ($97.96) to 615 yuan a metric ton as of yesterday, according to data today from the China Coal Transport and Distribution Association. That’s the lowest since Oct. 12, 2009, data compiled by Bloomberg show.
Manufacturing, which accounts for about 70 percent of China’s electricity demand, is contracting this month for the first time since October, according to the preliminary reading of a Purchasing Managers’ Index by HSBC Holdings Plc and Markit Economics on May 23. The nation’s hydropower output in the first four months of 2013 expanded 20 percent from a year earlier to 181 billion kilowatt-hours, data from the Beijing-based National Bureau of Statistics showed May 16. Thermal electricity generation climbed 1.6 percent to 1.34 trillion kWh.
“The low coal price is mainly because of sluggish domestic demand, especially from the heavy industrial sectors,” said David Fang, a Beijing-based director at the China Coal Transport and Distribution Association. “Sufficient rainfall in southern China is squeezing China’s demand for burning thermal coal. The price will stay at a low level throughout this quarter.”
China’s stockpiles of coal at major power plants were enough for 20 days of use as of the end of April, according to a statement on the National Development and Reform Commission’s website on May 24. The typical level for this time of year is about 14 days, according to Fang.
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