Interfax-China quoted industry experts said China coal supplies are expected to tighten during the first quarter of 2011 despite a comparatively abundant inventory.

Mr Yang Xianfeng vice chairman of China Coal Transportation Sale Society said at the 2011 Ocean Shipping Coal Forum that of China 218 million tonnes of coal inventory at the end of November, 40 million tonnes were kept by key coal production enterprises, 59.58 million tonnes by power generation companies and 22.34 million tons stockpiled at major ports.

He said that as the first year of Twelfth Five-Year Plan period, 2011 is expected to see a boost in fuel demand from various sectors, particularly during Q1. He expects coal demand to increase early in 2011, citing China Spring Festival in February, the peak period for heating demand and coal transportation.

Mr Xie Juchen a power fuel expert and former general manager of Zhong Neng Power Industry Fuel Co Ltd. noted that power generation companies' coal inventory stood at 56.90 million tonnes as of December 19. He said that lack of rain in Q1 may also heighten supply concerns. During Q3 of this year, abundant rainfall boosted hydropower generation by 30%YoY and reduced coal consumption over the period.

Mr Yang noted that China 2010 coal supply and demand as a whole was generally balanced due to an expanded production capacity in several regions. He said that production growth rates in Shanxi, Shaanxi, Ningxia and Guizhou Provinces all stood at over 20% during the first eleven months of the year.

Mr Xie said China coal supply is expected to stand at 3.4 billion tonnes while demand is projected to hit 3.3 billion tonnes for the whole of 2010. Of the supply, Mr Xie noted that 3.25 billion tonnes were domestically produced and 145 million tonnes were imported.

According to CCTS statistics, China exported 17.58 million tonnes of coal in the first eleven months, down by 13.5%YoY. Mr Yang expects that the country will have exported 19 million tonnes of coal during 2010. He said that experts have agreed that coal demand in 2011 would increase at a slower pace as the country experiences economic restructuring in the face of pressure to conserve energy and reduce carbon emissions. Efforts to curb the development of high energy consuming industries are also expected contribute to the slowdown

Despite these figures, 2011 is still expected to see a boost in coal supply capacity. Mr Yange noted that newly increased coal production next year is expected to amount to 300 million tonnes. Furthermore, increasing exports from Australia, Indonesia, Russia and Vietnam and the operation of new railway lines will also help push up supply and increase shipments from Shanxi and the Inner Mongolia Autonomous Region.

(Sourced from Interfax-China)