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Though the plan is still subject to the government's approval, China Shenhua has drafted a blueprint to build ten national coal stockpile bases with the reserve capacity of about 30 million tons, likely to scatter across eastern, southern, and central China.
The reserves, however, would only make a minor impact on coal prices since the amount is small when compared to national output. Statistics published by the National Development and Reform Commission, show that large-scale Chinese coal producers in 2008 produced 2.622 billion tons of coal.
The statistics also show that the social stockpiling by the yearend 2008 was 201 million tons, suggesting the 20-30 million tons of state reserves could hardly play a leveraging role in the market.
It is generally believed that the state strategic coal reserves are just a component of Chinese coal producers' commercial reserves, as prescribed by the Coal Law under revision and expected for formal release before the year's closing.
China Shenhua forecasts that coal prices in the second half would fluctuate within a narrow margin on grounds that Qinhuangdao Port, China's busiest coal trading port, has 5.15 million tons of coal reserves. The amount is well within the four to seven-million-ton range within which prices won't fluctuate.
China's coal demand is reviving with the recovery of the real estate and infrastructure industries, which can be seen from August's Purchasing Managers Index which struck a 16-month high of 54.0 and an upward curve in the output of power, steel, and cement.
During the first half, coal prices at Qinhuangdao Port rose about 10 per cent and Shenhua's sales price also increased by 10.1 per cent as compared to the same period of last year.
(XIC)lm
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