Bloomberg China Coal Benchmark Price Drops for a Fourth Week

China's Qinhuangdao coal, a national benchmark for the power-station fuel, fell for a fourth week as supplies remained above normal and the government capped prices. Power-station coal with an energy value of 5,500 kilocalories per kilogram declined 0.6 percent from a week earlier to a range of 770 yuan ($116) to 780 yuan a metric ton, data from China Coal Transport and Distribution Association showed yesterday.

Coal stockpiles at the port dropped 1 percent to 6.98 million tons last week, according to today's data. That is a relatively high level for supplies at this time of year, according to Wu Jie, an analyst at Orient Securities Ltd.

"Coal stockpiles remain ample despite freezing weather," Wu said by phone from Shanghai today. "The cap on the 2011 contract coal price also curbs the rise of spot prices."
China's government last month ordered a freeze on 2011 contract prices for thermal coal supplies to power stations at 2010 levels, after the nation's inflation rose to the highest in 28 months in November.

Power-station coal stockpiles stood at 57.07 million tons as of Dec. 20, equivalent to 15 days of use. In previous years, supplies at this time of year were equal to about ten days of demand, David Fang, a director at the coal association, said by phone from Beijing today.
The decline in prices will be limited because rising global coal costs will support Chinese demand, according to Fang.

The worst flood in 50 years in Australia's Queensland state has disrupted output from the world's biggest shipper of the fuel, driving the Asian benchmark price to $126.10 a ton at the end of last year, the most in 27 months.