05/27/2008, 00.00
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China’s energy production drops further

More and more plants are shutting down production for lack of coal, now priced at US$ 150 per tonne. The situation is expected to get worse in the summer as a result of the massive use of air conditioning. Billions of yuan are given to companies that sell fuel below cost.

Beijing (AsiaNews/Agencies) – Rising coal prices forced Chinese power plants with a capacity of 6.82 gigawatts (GW) to shut in the four days before May 24. Thermal coal prices in Australia, a benchmark for Asian coal prices, jumped to a fresh record high of more than US$ 150 a tonne this week, bolstered by high demand amid tight supplies.

A 35,000 tonne parcel of Australian coal for July delivery was traded on Friday at US7 a tonne FOB Newcastle port, while two other 30,000 tonne shipments for delivery in August and September were traded at US$ 142 a tonne and US$ 145 respectively. Traders also said recent high oil prices have boosted coal demand from utilities around the world

Mainland China has 713 GW of power generating capacity, more than three quarters from coal-fired plants.

The government has tried to keep energy prices low in order to keep inflation within bounds but for many plants this has meant losses forcing them to maintain coal stocks at a minimum to contain costs with the risk of having to shut down whenever supplies are delayed.

The situation could get worse since coal stocks in many plants in Anhui and Hunan fell to 3-4 days production. Other provinces like Inner Mongolia or Hebei are just slightly better off.

Meanwhile the Xinhua news agency reported that Sinopec received a 7.1 billion yuan (US$ 1.065 billion) in government subsidies last month to offset its processing losses from the sale of fuel at fixed prices.

Sinopec imports roughly an average of 11 million tonnes of crude oil each month (2.7 million barrels per day), accounting for about 80 per cent of China’s crude oil imports. (PB)

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