Snow storms paralyse transport while demand set to climb Shares in mainland coal mining firms climbed yesterday, defying a slump in the broader market as investors expect coal prices to continue to climb because harsh weather conditions have disrupted supply. Analysts said coal mining stocks would continue to outperform this year, thanks to strong demand from the mainland, where coal supplies 70 per cent of total energy output. 'The unprecedented snowfall on the mainland will trigger greater than expected demand for coal, creating a positive outlook for coal stocks,' said Yiu Chin, the financial analysis director at Altruist Financial Group. Shares in China Shenhua Energy, the nation's largest coal miner, rose 0.12 per cent to HK$41.85 in Hong Kong and 0.45 per cent to 60.80 yuan in Shanghai. China Coal Energy, the second-biggest, climbed 1.21 per cent to close at HK$20.95 in Hong Kong. The company is seeking to raise up to 25.7 billion yuan from a Shanghai listing. Yanzhou Coal Mining, the listed flagship of the nation's fourth-largest coal miner Yankuang Group, was up 2.65 per cent at HK$13.96 in Hong Kong and up 0.32 per cent at 22.08 yuan in Shanghai. Newly listed Hidili Industry International Development, which produces coking coal for steelmaking, advanced 2.54 per cent to HK$10.50. 'Yanzhou Coal and Hidili rose more [by percentage] because their price-earnings ratios have been relatively low,' said an analyst at an American investment bank. 'Unlike Shenhua and China Coal, whose selling prices are set by contracts, Yanzhou and Hidili use spot prices, so they could benefit more from the snow.' Transport services on the mainland, particularly in southern and northwestern regions, have been brought to a virtual standstill by severe winter weather, cutting off coal supplies to power plants and driving up coal prices. Coal prices have also been fuelled by low coal inventories at power plants and seasonal factors such as rising winter demand and passenger transport before the Lunar New Year. The mainland's benchmark coal price in Qinghuangdao port rose to a record 645 to 655 yuan per tonne yesterday, extending this year's gain to 17 per cent. Prices in Asia were also affected by the supply shortage on the mainland as well as disruptions in other exporting countries such as flooding in Australia and power cuts in South Africa. Power-station coal prices at Australia's Newcastle port, a benchmark for the Japan, South Korea and Taiwan markets, jumped 3.9 per cent to a record U$93.35 per tonne in the week to January 25, according to the globalCOAL NEWC Index. The price soared 73 per cent last year. Zhu Hongren, deputy director of the National Development and Reform Commission's economic operations department, said yesterday that Beijing could take measures to rein in coal prices if they rose too sharply. However, JP Morgan said in a report that the government was unlikely to impose a coal price cap as that would undercut its efforts in recent years to liberalise prices. The bank expects the mainland to become a net coal importer this year because it does not have sufficient output for exports. 'Another year of coal tightness looks unavoidable,' it said. 'We expect coal prices to rise in the next two years.'