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Thermal coal demand spikes as Chinese power disrupted
by Sam Collyer last modified Jan 14, 2010 12:25 PM

Thermal coal spot prices have surged as heavy snow threatens power supplies in northern China.

The Chinese Government this week sent soldiers to Qinhuangdao Port to help supply coal to power stations in a bid to avoid widespread power failures.

Offshore oil and gas operations have also been affected.

Other parts of China have had to reduce power consumption to prioritise heating.

Eighty percent of China's power needs are fuelled by coal, almost all of which has historically been supplied domestically.

However, China became a net importer of thermal coal last year, sourcing about 50m tonnes of the product from overseas.

Thermal coal spot prices have peaked above US$100 per tonne as China goes looking for the commodity as far afield as Columbia.

News of China's concern about coal supplies will add to pressure in Australia for continued coal export infrastructure expansion.

It comes as the port of Newcastle, Australia's biggest thermal coal port, battles a queue of more than 50 ships, which will mostly deliver coal to power stations in Japan and South Korea.

According to Newcastle Port Corporation figures, bulk carriers are waiting an average of 15 days to load.