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China warns of coal supply surplus

(Xinhua)
Updated: 2006-08-30 14:00

China's top planning body, the National Development and Reform Commission (NDRC), has warned of a surplus in coal supply if no measures are taken to check new investments.

The NDRC issued the warning in an analysis of performance of the coal industry in the first half of the year.

By the end of last May, there were 2,743 coal-related investment projects being carried out in China, involving a total investment of 343 billion yuan (43 billion U.S. dollars), Xinhua-run China Securities Journal reports on Wednesday.

These projects, when completed, will increase the country's coal production by 800 million tons to over 2.1 billion tons. In 2005, the demand was 2.1 billion tons.

The risk of oversupply is also evident in rising inventory at coal mines and major ports, the report said.

By the end of June, the amount of coal in stock had hit 153 million tons, the highest since 2003.

Coal prices have also declined in some regions, the report said.

Some industry analysts, however, disagree with the NDRC, believing that the growth of China's coal demand over the next few years may exceed the current 10 percent, which would not lead to a serious oversupply.