SHANGHAI, Jan. 18 (SMM) – SMM carefully selects the following key market news:
Negotiation between Coal and Power Enterprises Stagnates Again
The Chinese government tries to solve the contradiction between coal and power enterprises and other problems of economic and social development through reforms. However, the negotiation on long-term contracts between coal suppliers and power companies has become more severe after new policies were introduced, but the government is stepping up efforts in promoting energy reforms.
Five Large State-Owned Power Companies Accept Rising Coal Prices
As of January 16, the volume of total long-term contracts 2013 between coal suppliers and power companies reached 830 million mt. Five large state-owned power companies which can exert a big influence on power and coal markets have finalized most of contracts, with coal prices rising compared with those seen in major contracts in 2012.
China Power Consumption Growth Slows to 5.5% YoY in 2012
China's National Energy Administration announced January 14 that China's power consumption was 4.9591 trillion kwhs in 2012, up 5.5% YoY, down 6.2% from the 11.7% level in 2011.
Increase in Special Oil Levy Threshold Unlikely
The increase in threshold for special oil levy materialized just one year ago and is unlikely for the time being. Nevertheless, with the cost of oil exploitation at many old oil fields exceeding USD 55/bbl, it's suggested that the Ministry of Finance and the NDRC should raise the threshold for special oil levy from USD 55/bbl to USD 70/bbl for certain old oil fields.
China Refined Oil Surplus May Reach 29 Million Mt in 2013
Major oil suppliers have initiated price wars to grab market shares. Many oil companies adopted various sale strategies to boost sale volumes, causing diesel prices to fall. The NDRC has not been seen to raise oil prices ahead of the Chinese New Year holiday, but if crude oil prices increase, the NDRC is likely to take actions following the holiday. However, in the face of unfavorable factors both at home and abroad, domestic refined oil markets are unlikely to reverse weakness, despite growing domestic demand.