September 08, 2008

Coal shortages in China attributed to excessive demand

Interfax cited a coal producer in Shanxi Province as saying that the coal shortage that China's coal fired power plants are currently experiencing is mainly due to excessive demand and that it will last until March.

He said that "Snow and rain are not the major reasons for the coal shortage this time. Production from China's coalmines has not been able to keep up with increasing demand from the domestic market. This is the main reason for the current emergency."

With the upcoming Spring Festival in early February, most small or middle sized coalmines in Shanxi have ceased operation for the holiday. Even some big coalmines will temporarily stop production for the holiday.

On January 23d 2008, the National Development Reform Commission announced a new regulation requiring national coal producers to continue normal operations during the Spring Festival, in an effort to meet the demand of coal fired power plants. NDRC has also said that coal producers should not take advantage of the coal emergency to raise coal prices.

Previous media reports had put the blame for China's current coal crisis mainly on transportation problems.