China's coal trading moving closer to the market

A senior coal industry official has said China's coal trading has been moving closer to the market, with the market playing a crucial, bigger role in the pricing and allocation of coal products.

At a national coal supply work meeting held in the national capital recently, Pu Hongjiu, vice chairman of the China National Coal Association, said the market has made it possible for coal enterprises to have a say in coal trading.

As an essential energy industrial sector, China's coal trading has long been placed under the State planning and enterprises have to go by government directions rather than market rules.

Pu said a market mechanism is now emerging in coal trading, under which the selling and buying companies place orders by themselves in the market, and this lays the foundation for the establishment of a unified, open, competitive and orderly coal market system.

According to statistics released by the China Coal Transportation and Marketing Association, the fair ended with 7,402 signed contracts, involving a combined contractual volume of 914 million tons, or 80 million tons more than on the previous fair held in 2004. Of the total contracted volume, 422 million tons go to electric power industry, an increase of 129 million tons, or a rise 44.45 percent over 2004.

The rule for negotiating price by both the selling and buying parties was resorted to at the fair, said Pu, partly resolving the problem of undervalued trading prices.

To cater to an increased coal demand, the related transportation departments have made a plan for 2005 to raise their coal transportation capacity by some 130 million tons, Pu said.

Source: Xinhua