HONG KONG, March 19 (Reuters) - China's thermal coal prices are likely to ease further this year as the country's economic growth slows, a good sign for the world's second-largest power industry, a top Chinese power company executive said on Monday.
Wang Yu Jun, chief executive officer of state-run power producer China Resources Power Holdings Co Ltd, said spot thermal coal prices in China have fallen sharply and the trend would continue as demand weakens.
China's benchmark spot coal prices with a heating value of 5,500 kcal/kg have declined to the current 765 yuan per tonne from more than 800 yuan at the end of last year, he noted.
"It is mainly because China's GDP growth has slowed substantially since the last quarter. We believe coal prices will fall this year," Wang said.
"If this year's GDP growth is in line with what the government has just forecast, I think this year's fall in coal prices will be rather big," Wang told reporters at the company's results briefing.
Chinese Premier Wen Jiabao announced earlier this month that the government had cut the nation's growth target to 7.5 percent for 2012, versus the longstanding goal of 8 percent annual growth in a move anticipated by investors expecting more focus on economic rebalancing and defusing price pressures.
A coal price fall will be boon to China's power sector, which predominantly relies on coal for generation and cannot freely pass on fuel costs to end-users.
China Resources Power on Monday posted a net profit of HK$4.45 billion for 2011, down 9.2 percent year-on-year, lagging market forecasts of HK$4.96 billion, weighed by fuel costs.
Chinese power firms, such as Huaneng Power , Datang Power , Huadian Power and China Power International have been hit hard by coal price rises in recent years.
Thermal coal prices in China had risen 41.2 percent by the end of 2011 since the fourth quarter of 2009, while the government, worried about fuelling inflation and stoking public discontent, had only allowed a minimal rise in power tariffs.
For China Resources Power, fuel costs soared 29.4 percent year-on-year to HK$38 billion last year, while the average tariff of its power plants only edged up 3.6 percent.
Wang said the company, whose net installed capacity would rise to 25,000 megawatts this year from 22,230 megawatts at the end of 2011, plans to diversify further into coal mining to lower fuel costs.
Coal mines owned by the company and its units aim to produce more than 18 million tonnes of coal this year, up from 16.4 million tonnes in 2011 -- accounting for more than one fifth of the company's annual coal consumption.
Up to 40 percent of its annual coal consumption -- part of which was secured via long-term contracts -- should come from the company's own mines by 2015, Wang said, adding that the company would buy more mines and expand existing operations.
China Resources Power bought a domestic mining asset for $669 million a year ago.