Beijing Business Today reported that China's coal and
electricity companies signed deals for a total of 1.87 billion metric
tonnes of coal for 2013, an increase of 55.8% YoY.
Analysts said the surge is due to the liberalization of the coal and
electricity prices. Uncertain about the future price of coal, electricity
companies are willing to purchase more coal. Coal producers are also
willing to sell more coal as they are faced with rising stocks of the
commodity.
In December, China's State Council decided to liberalize the prices of
coal supplied to power plants in 2013.
Most power generated in China comes from coal-fired plants, which makes
power producers heavily exposed to the prices of the commodity. In order
to keep electricity tariffs stable, the government has asked coal
suppliers for years to sell to power firms at contracted prices, which are
far below market rates.
Source:
Beijing Business Today
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