China’s Power Plants Slash Coal Use by 17% as Economy Slows

    Power plants in China, poised to post a surplus in electricity supply this year, burned 17 percent less coal last month compared with a year earlier because of slower economic growth.

    Daily coal use at generators linked to the network of State Grid Corp. of China, the nation's dominant electricity supplier, slumped to 1.69 million metric tons, David Fang, a director at the China Coal Transport and Distribution Association, said by phone from Beijing yesterday, citing data from the grid operator.

    Factory output contracted for a fourth month in January as exports fell because of the global recession, cutting electricity consumption, a government-backed survey showed on Feb. 5. Weekly coal prices at Qinhuangdao port, a domestic benchmark, dropped about 3 percent in the seven days to Feb. 9, according to the coal distribution group.

    "Power demand remained weak last month, especially as factories shut during the Lunar New Year holidays," Fang said. Coal stockpiles at power plants more than doubled to 36.4 million tons as of Jan. 31 from the year-earlier period, said Fang, citing State Grid statistics.

    Huaneng Power International Inc., China's biggest generator, fell 1.8 percent to close at HK$5.60 in Hong Kong trading yesterday. China Shenhua Energy Co., the nation's largest coal producer, gained 2.3 percent to HK$18.70. The benchmark Hang Seng Index added 0.8 percent to close at 13,769.06.

    China may face an oversupply of electricity this year as demand slows while new generating rojects are being built to help stimulate the economy, Hou Yong, a director of information at the China Electricity Council, said on Feb. 6. Gross domestic product expanded by 6.8 percent in the last quarter, the weakest pace since 2001.

    Electricity Production

    Electricity generation fell 6.7 percent nationwide in the first half of January from a year earlier, Fang said. Coal- fired power output plunged 10 percent during the same period, he said.

    The price of coal with an energy value of 5,500 kilocalories a kilogram at Qinhuangdao dropped to 585 yuan ($86) a ton as of Feb. 9 from 605 yuan a ton a week earlier, according to information provided by the coal association.

    China Coal Energy Co., the nation's second-biggest producer of the fuel by sales, increased output at a slower pace in January because of falling demand from power producers.

    Spending on coal-fired plants in the world's third-biggest economy will decline this year to reduce carbon emissions, Xue Jing, director of information at the China Electricity Council, said on Feb.5.