Shenhua has signed 2010 coal term deals with some power generating companies at 570 yuan a tonne, up 30 yuan from a year earlier.
China coal producer Shenhua has signed 2010 coal term deals with some power generating companies at 570 yuan a tonne, up 30 yuan from a year earlier, industry sources said on Thursday. But Shenhua has decided to cut back on the volume of term contracts to leave more tonnage for spot sales, sources said.
China Shenhua Energy Co sold about 75 percent of its coal via term contracts in 2009, analysts estimated.
Shenhua's coal sales in the first 11 months of 2009 totalled 231.9 million tonnes, compared with total 2008 sales of 232.7 million tonnes, based on company statements.
Spot coal prices in China have rebounded from a slump in 2008 at the onset of the global financial crisis. Prices for coal with calorific value of 5,500 kcal/kg (NAR) have jumped by more than a third from a year earlier to about 800 yuan a tonne.
Shenhua could not be reached for immediate comment.
At least two of China's top five power generating groups, including Huaneng Power International, Datang International Power, Huadian Power International, China Power International, and Guodian Power Development Co, have agreed to the price increase, company sources said.
"The 30 yuan increase isn't bad, and we are happy with the contracted tonnage and will sign the contract very soon," said an executive at one of the five firms.
China's major coal miners and power generating groups held an annual meeting in December to discuss next year's term prices, until the latest meeting in 2008 led to a multi-month stalemate between the two sides that couldn't reach a compromise on prices.
The National Development and Reform Commission, the country's top economic planning body, decided in December to cancel a meeting for 2010 term price negotiations and instead asked for the talks between individual miners and power companies to be concluded by Jan 14.
China's power generation has rebounded strongly since the end of 2008, with output from major power plants up 6.66 percent from a year earlier, according to the China Electricity Council (CEC).
Recent cold snaps have also helped lift demand for power, causing coal and power shortages in a number of provinces.