China plans to set up a national coal trading center this year as part of its reform of the coal ordering system, which aims to solve the problem of oversupply.

Sources with the National Development and Reform Commission (NDRC) said China's coal supply and demand would balance this year. But the pressure of oversupply is increasing due to rapidly rising coal output, Beijing News reported on Tuesday.

The NDRC forecast China's total demand for coal will hit 2.25 billion tons in 2006, with domestic demand standing at 2.17 billion tons, and the remaining 80 million tons exported.

China will consume 1.21 billion tons of coal to generate electricity, it said.

Meanwhile, the nation's coal output capacity is on the rapid rise. Coal production capacity has been expanded by at least 60 million tons due to the operation of newly-built, renovated and expanded coal producers last year, the report said.

The difference between the market price and the state-fixed price for the coal supply to power plants, which can range from 30 yuan (US$3.75) per ton to 80 yuan (US$10) or even 100 yuan (US$12.5) per ton, is another problem plaguing the sector.

The NDRC suggested a series of measures be implemented to straighten out the coal industry, including carrying out the state regulation for management and supervision of coal marketing, and controlling the approval of new licenses for coal dealers.

(Xinhua News Agency March 22, 2006)