China's Main Coal Prices Fall as Winter Demand Eases

QINHUANGDAO, Feb. 2 -- Weekly coal prices at China's Qinhuangdao port, a benchmark in the world's biggest producer and consumer of the fuel, fell for the first time in seven months as winter demand began to ease.

Prices for coal with an energy value of 5,500 kilocalories a kilogram dropped to between 790 and 800 yuan ($117) per metric ton as of today from between 800 and 810 yuan a week earlier, data from the China Coal Transport & Distribution Association showed. That's the first decline since July 6.

China faced its coldest winter in at least 50 years as heavy snowfalls snarled overland coal transportation and high winds shut Qinhuangdao, from which the nation ships half of its seaborne coal. Coal prices at the port had increased 25 percent over the last three months, data from the association showed.

"Eight hundred yuan will be the peak because the worst of the winter is over," David Fang, a director at the association, said by telephone in Beijing today. "Demand will fall toward the Lunar New Year as factories close for the holiday."

The world's second-biggest energy consumer may continue to face a coal shortage until the end of March because of heightened winter demand, the government said on Jan. 25. China relies on coal for about 80 percent of its power output.

The nation may consume between 4 and 6 percent more coal this year, or about 3.4 billion tons, on continued economic growth, China Securities Journal said on Dec. 28, citing a forecast from the China National Coal Association.