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Print[Ferro-Alloys.com] China's coal prices, already near a two-year low, are likely to fall further as industrial demand growth slows and imports add to pressure on domestic stocks, industry officials said Tuesday.
Benchmark prices in China, the world's top producer and importer of the fuel, have been lolling at a two-year low of RMB626 a ton since end-July amid a global supply glut.
Hou Wenjin, a coal industry official with the Shanxi provincial government, the country's second biggest coal producing region, predicted China's 2012 imports could top 200 million tons as coastal utilities lock in cheaper foreign supplies.
"Overall inventories, at over 80 million tons, are still much higher than normal levels, so I don't think there will big demand even for winter restocking," he said.
Imports of more than 200 million tons would compare with 2011 imports of 182.4 million tons. January-July imports totaled 133 million tons, a rise of 51.8 percent over a year earlier, customs data shows.
China produced 3.52 billion tons of coal in 2011 and has set a target of 3.65 billion tons this year.
Chen Ze, deputy director with the coal industry department of the government of Inner Mongolia, China's biggest coal producing region, said demand growth from key industrial users such as those in the steel and cement sectors would "most likely slow."
A slump in the Chinese steel sector has also brought coking coal prices under pressure, and this will have knock-on effects for coal as a whole, said Dong Yueying, secretary-general of the China Coal Transportation and Distribution Association.
"Falling prices mean it is no longer economical for mines to wash the coal to get higher specifications. So more mines will sell into thermal markets," he said.
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