Coal imports in the first quarter of this year exceeded exports for the first time ever.

 

Fuelled by a need to power its robust economy, the world's largest coal producer is expected to import more and more coal in the near future.

 

As the need for coal grows, China might see a rise in prices within the next two years despite them rising sharply last year, experts said.

 

The country imported 14.3 million tons of coal in the first three months of this year, a year-on-year rise of 60.4 percent. Meanwhile, it exported 11.42 million tons, a 32-percent drop from last year, according to customs figures.

 

"China may see a pure coal import this year and the domestic coal price has room for further inflation," Zhao Jianian, deputy secretary-general of the Coal Industry Economic Research Association, said.

 

But Zhao expects the coal price will only rise "moderately" given the fact that unlike the oil industry, the coal industry only wins a poor profit edge.

 

Xiao Hanping, an analyst with Galaxy Securities, said that expanding domestic demand might generate a price hike that was "impossible to evaluate at present".

 

The current price, of about 500 yuan (US$64) per ton, has already reached a peak after a 15-percent rise last year, Zhao said. But imported coal costs about US$63 per ton.

 

Experts said the government's latest policies aimed at regulating the accident-plagued coal industry and protecting domestic energy resources have tipped the previously abundant coal market.

 

The country has streamlined its coal mining industry since last year by closing thousands of small-scale mines. As a result, there will be total production loss of 380 million tons through 2010.

 

Suspending the approval of coal mine projects has led to a sharp decline in the fixed asset investment in the industry, with the investment growth dropping from 65.6 percent in 2005 to 27.2 percent in 2006 and 2.3 percent in the first two months of this year.

 

The regulative policies have also lifted the cost of coal production, as coal producers are required to shoulder the environment and social costs of their productions.

 

Additionally, to discourage coal exports and make the most use of foreign resources, the government has also scrapped tax rebates and now levies export duties on coal.

 

National statistics show that China produced 2.38 billion tons of coal in 2006 and consumed 2.37 billion tons, promoting a balanced market.

 

But with the country's GDP slated to grow at an average of 9 percent through 2010, coal consumption is expected to reach 2.87 billion tons in 2010, 270 million tons more compared with the 2.6 billion tons production scale planned.

 

But experts refuted the suggestion that domestic demand might generate an international coal price hike.

 

China's imports of coal have grown since last year, a sharp reversal of the country's previous image as the world's second largest coal exporter in 2003.

 

Last year, it exported 63.3 million tons of coal, down 11.7 percent from 2005, a decrease for the third consecutive year. Imports were 38.25 million tons, up 46.1 percent, according to the General Administration of Customs. Sources said 84.1 percent of the imports came from ASEAN and Australia, and 24.18 million tons went to private companies.

 

(China Daily April 19, 2007)