Coal Prices to Hit Chinese Power Plants

26 October 2010 (Last Updated October 26th, 2010 18:30)

Chinese power generators are expected to face losses in 2010 as higher coal prices continue to reduce profit margins. China's largest electricity provider, Huaneng Power International, which depends on coal for 70 to 80% of its generation, witnessed a fall in its third-quarter profits

Chinese power generators are expected to face losses in 2010 as higher coal prices continue to reduce profit margins.

China's largest electricity provider, Huaneng Power International, which depends on coal for 70 to 80% of its generation, witnessed a fall in its third-quarter profits by nearly half from that a year ago due to higher costs.

Many state-owned power companies are suffering a 50% loss this year, according to China Daily.

The price of power-station coal with an energy value of 5,500 kilocalories a kilogram rose to between 750 yuan ($113) and 760 yuan a ton as of 26 October 2010, compared with 710 to 720 yuan on 25 September 2010.

Bank Of China International executive director Liu Zhicheng told China Daily that the country's benchmark coal price is estimated to increase 9% this year and 14% in 2011.

In the approaching cold weather, coal consumption is expected to increase with more demand for heating.

According to the National Energy Administration (NEA) China's power consumption will slow in the fourth quarter and coal supply is generally adequate because of the growth in factory production easing.