China Coal Ban May Boost Qinhuangdao Price, Fenwei Energy Says

China’s proposed ban on lower-quality coal imports is likely to boost domestic benchmark prices by as much as 8 percent as supplies drop, according to Fenwei Energy Consulting Corp.

Spot cargoes at the port of Qinhuangdao, a benchmark for the nation’s power station coal, may increase by as much as 50 yuan ($8) per metric ton, Luther Lu, a chief market analyst at the consultancy in Taiyuan, said by phone yesterday. Domestic power plants may buy more coal from Newcastle in Australia or South Africa if prices rise, he said.

China is considering a ban on imports of some lower-quality thermal coal grades, the Economic Information Daily reported May 16, citing an announcement at a conference held by the National Development and Reform Commission and the NEA this month. Nobody answered three calls and a fax to the NEA’s press office in Beijing today.

“Such draft regulation, if carried out, will ban China from getting at least 60 million to 70 million tons of coal imports, mostly lignite,” said Lu.

The benchmark price of Qinhuangdao coal with energy value of 5,500 kcal/kg was at 605 to 615 yuan a ton as of May 19, unchanged from a week earlier, according to data from the China Coal Transport and Distribution Association yesterday. The price has been unchanged in the past three weeks after dropping on April 21 to the lowest since October 2009, data compiled by Bloomberg shows.

— With assistance by Sarah Chen, and Jing Yang

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