Chinese coal buyers to 'bide their time'

CHINA’s National Development and Reform Commission is reportedly urging the nation’s utility companies to accept 2015 thermal coal prices of 550 yuan a tonne ($US89.4/t) and to take on multi-year contracts.
Chinese coal buyers to 'bide their time' Chinese coal buyers to 'bide their time' Chinese coal buyers to 'bide their time' Chinese coal buyers to 'bide their time' Chinese coal buyers to 'bide their time'

 

Blair Price

Such a price will make quality Australian coal exports to China competitive, but the NDRC’s demands have reportedly not been well received by the utility company sources of Reuters.

“That is an unreasonable number (550 yuan), everyone knows the market is way oversupplied,” a China Datang Group procurement manager told the newswire.

“We have plenty of stock and we will bide our time."

Multiple sources also reportedly said that leading coal producer Shenhua Energy had raised its thermal coal prices by 50 yuan since September to 539 yuan/t.

“Companies sometimes demand prices above the benchmark in hope of driving the market higher,” the news wire commented.

However, Galaxy Futures coal analyst Zhang Yuan hinted that utility companies still have the upper hand during annual coal supply negotiations, currently underway.

"Current (benchmark) prices are not sustainable and could easily fall back to 500 yuan next year,” he reportedly said.

“Buyers know that so they don't want to commit."

The stakes remain high for China’s struggling coal scene.

“With nearly 70% of China's miners making losses, failure by producers to secure a better term price could push some mid-sized and higher-cost miners out of business, posing a threat to the economic health of coal-dependent regions,”Reuters reported.

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