Some power generation companies in China have defaulted on key coal contracts signed with coal producers earlier and turned to much cheaper imported coal.
A Shandong based power producer said that we have no other choice but to cut deals as there's no room for stocking more coal while suppliers are still sending cargoes. And coal overstocked at some other power plants even was enough to cover 30 days' use.
Trader sources said that as a contrast, coal suppliers are making all kinds of efforts to boost sales but made little effect with some small coal enterprises having stopped production to offset losses.
According to industry portal China Coal Resource, the ex stock price for South Africa coal of 6000 Kcal per kilogram at Guangzhou stood at CNY 750 per tonne as of August 6th 2012, CNY 80 per tonne or 9.6% lower than that of Shanxi premium mix with the same calorific value.
Meanwhile, the spot coal price for thermal coal of 5500 Kcal per kilogram at China's benchmark Qinhuangdao port has fallen to CNY 625 per tonne to CNY 635 per tonne further approaching that for contracted coal of the same quality, showed data from CCR