China Likely Unable to Meet Own Domestic Coal Needs: Imports May Rise 78%

Submitted by amyguinan on December 21, 2010 – 9:41am

The end of 2010 saw communities in central and northern China facing power cuts and rationing as winter coal supplies fall short of surging demand: about 620,000 households were left without power due to bad weather in Zhejiang, a province west of Shanghai, a report on the State Grid website said

In order to meet surging demand and the relaity of coal constraints, China and India may increase imports of coal by 78 percent to 337 million metric tons next year, further driving up prices from the highest in two years and diverting supplies from Europe to Asia.

China’s appetite for the commodity sent benchmark domestic prices at the port ofQinhuangdao to a two-year high of $129 a ton for the week ended Nov. 26, according to data from IHS McCloskey, a Petersfield, U.K.-based researcher.

“All the indications are for increased demand in 2011,” Andrew Harrington, an analyst at Patersons Securities Ltd. in Sydney, said in a Dec. 9 interview. “China has become much more important especially because of the expectations that they will be unable to meet their own needs from domestic supply.”

China added about 51 gigawatts of coal-fired capacity last year, according to data from Daiwa Capital Markets and the U.S. Energy Department.

China will need 2 billion tons of coal over the next 10 years to fuel the country’s industrial development, the China Securities Journal reported today, citing Dai Yande, deputy head of China’s Energy Research Institute.   The United States, in comparison, uses roughly 1 billion tons of coal/year.

“China still has many decades left to develop. Only a fraction of the population, and really just the eastern part of the nation, has experienced profound growth. The rest of the country needs to develop as well.”

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