The first round of negotiations on coal exports between China and foreign countries has concluded
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Yesterday, reporters learned that the first round of negotiations on coal exports between China and other countries has concluded without any agreement being reached between the two sides. However, both sides have expressed their respective intentions: the foreign party stated the need for China to increase exports, while the Chinese side is seeking price increases. It is understood that due to the snow disasters, China temporarily banned coal exports in February, which led to a severe shortage in the international coal supply and high coal prices. Regarding the first round of negotiations, Wu Yongping, chairman and general manager of Datong Coal Mine Group, told reporters that due to changes in both domestic and international markets, the price of coal exported this year should be similar to that in December last year or in February and March of this year; it will certainly be higher than the prices at the beginning of 2007. It is understood that the export price of thermal coal in February once reached over 120 dollars per ton. In response, coal expert Li Chaolin said that at the end of last year, the rise in foreign coal prices far exceeded that in domestic markets. By February this year, due to a decline in China’s coal exports, international coal prices soared significantly; it is estimated that coal prices could double this year. Compared to the prices in 2007, the price per ton will rise to at least $134. Looking at the trend in international coal prices, the spot price of Australian BJ coal was around 55 dollars per ton in 2007; it remained stable until June when it began to rise rapidly, reaching over 90 dollars per ton by December. This year, international coal prices have increased by 44%, rising from 90 dollars per ton to 130.95 dollars per ton by February, within just two months. Li Chaolin said that China is a major coal producer, with reserves accounting for about one-third of the world’s total. Therefore, its export volume has a significant impact on the prices in the world coal market. According to preliminary figures released by the General Administration of Customs of China on the 10th, China’s coal exports in February amounted to 3 million tons, a 28.9% decrease compared with 4.42 million tons in the same period last year. The total coal exports for the first two months of this year were 8.75 million tons, representing a 13.5% increase over the corresponding period last year. Regarding the coal export negotiations with Japan, Huang Qing, the secretary of the board of directors of China Shenhua Energy Co., Ltd. (hereinafter referred to as “China Shenhua”), said that the four major domestic coal companies – Shenhua, China National Coal Group, Minmetals, and Shanxi Coal Import and Export Corporation – will all send representatives to form a negotiation team in order to determine with the Japanese side the contract prices and quantities for the thermal coal and metallurgical coal that China will export to Japan in 2008. It is reported that coal contract negotiations between China and Japan did not proceed smoothly in 2007. At that time, the price of thermal coal was between $67 and $67.5 per ton; the agreement did not include Yanzhou coal but did include Datong coal. The contract price for thermal coal was nearly 30% higher than in 2006, which was lower than what the Chinese side had expected earlier. Negotiations on contractual coal exports between another major coal exporter, Australia, and Japan, began in 2008; once those talks are concluded, annual coal contract negotiations between China and Japan will be launched in full. Australia is also seeking a significant increase in coal prices. It is reported that Australia’s coal supplier, Rio Tinto, plans to raise the price of coal for Japan’s utilities sector by 143% in 2008, offering the coal at $135 per ton, compared to $55.65 per ton in 2007. The reason for this price increase is the lack of any signs of an increase in global supply. Domestically, Wu Yongping said that the increase this year is around 10%, and on that basis, any changes will not exceed 5% to 10%. Because supply and demand in the domestic market are roughly equal. It should be around the same price as the annual contract signed last year. (Reporter: Niu Shunsheng)
It is almost certain that international contract coal prices will rise significantly this year. By Yu Xiangming, March 12, 2008, 07:52. Source: Shanghai Securities News. [Font size: Large, Medium, Small] Print, Comments, Forum, Web clipping, Mobile review, Correction. E-mail recommendation: The negotiations for international long-term coal contracts started recently in 2008, and the industry expects a significant increase in contract coal prices this year. Recently, negotiations on coal export contracts for 2008 between Australia and Japan have begun, and negotiations on coal contracts for 2008 between China and Japan will also be launched in full force. As international coal prices have reached new highs this year, with spot prices for Australian coal rising significantly (around $130.95 per ton), all of this suggests that the annual contract coal prices between China and Japan are likely to increase substantially. Moreover, after several rounds of negotiations between China and Japan in 2007, a 30% increase in the price of thermal coal was finally agreed upon. It is worth noting that the pressure for a short-term rise in thermal coal prices is quite significant. “Snow disasters in China, floods in Australia, and supply disruptions in South Africa directly led to a sharp rise in the prices of thermal coal in Asia. ”Industry insiders say. However, the underlying reason for the rise in coal export prices this time is the shift in global energy consumption toward coal. ”Wang Ye, a researcher at CITIC Securities, expects that the export price of coal by Chinese coal companies in 2008 will be between $110 and $130 per ton, representing a rise of 60%-88% compared to $67.9 per ton in 2007. He pointed out that in the future, due to insufficient infrastructure in major coal suppliers such as Australia and South Africa, it will be difficult for their production levels to increase significantly. Meanwhile, China, Indonesia, and Vietnam will also gradually reduce their exports in order to meet their growing domestic demand. As a result, international coal prices are likely to remain under upward pressure in the long term. In this regard, UBS also believes that until 2010, there will be a shortage of thermal coal and rising costs, which will keep prices for thermal coal at relatively high levels in the long term. It is predicted that the benchmark coal price will reach $120 per ton in 2008, and remain at $100 per ton in 2009 and 2010. Wang Ye further analyzed that China’s policies aimed at promoting imports and restricting exports have gradually turned the country into a net coal importer. \"Under the policy environment in China that does not encourage coal exports, Chinese coal companies have managed to raise prices significantly, with contract prices being higher than those agreed upon by Japan and Australia; this will also contribute to an increase in the export prices of coal by Chinese coal companies this year.\" ” It is reported that, following past patterns, the China-Japan coal negotiations will take place in March. The reporter learned from China Shenhua that the four major domestic coal companies—Shenhua, China National Coal Group, Minmetals, and Shanxi Coal Import and Export Corporation—will all send representatives to form a negotiation team in order to determine with the Japanese side the contract prices and quantities for exporting thermal coal and metallurgical coal. The company also stated that spot prices in Australia have a significant impact on negotiations regarding contract coal prices between Australia and Japan, and the expectations of both parties regarding future coal prices are also crucial.