Hebei port coal inventory jumps more than 50pc to 8.7m tonnes

Coal inventory at the nation's largest coal port has surged more than 50 per cent in just over two months while spot market coal price fell some 10 per cent, but market watchers were divided as to whether tight supply will see a fundamental shift.

Zhou Xi'an, head of the National Energy Commission's department of general affairs, told a power industry conference yesterday that inventory at Hebei's Qinhuangdao port soared to 8.71 million tonnes last week.

'This is over three million tonnes higher than normal and is close to the nine million-tonne capacity of the port's stockpile capacity,' he said.

According to China Coal Transportation and Distribution Association data, inventory of the fuel stood at 5.68 million tonnes on July 13. Mr Zhou said the price of coal with a heating value of 5,500 kilocalories per kilogram had eased to 860 yuan (HK$977) to 930 yuan a tonne, from just over 1,000 yuan in July.

This came after Beijing imposed in late July a price ceiling of 860 yuan on coal traded at Qinhuangdao to tame inflation and protect loss-making power producers.

Lower coal prices and speculation of further power price increases amid easing consumer price inflation have seen investors bid up power producers' share prices on expectations of a turnaround in their losses, which are highly dependent on government policies.