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Friday 18 Aug 2017 | 15:22 | SYDNEY
Friday 18 Aug 2017 | 15:22 | SYDNEY

China's coal fires will keep burning

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COMMENTS

20 October 2008 09:31

Last Friday, Professor Xu from Griffith University, an expert in the Chinese electricity sector and the author of the Lowy-Griffith publication China’s Struggle for Power, emailed me questioning local news stories about a looming drop off in China’s demand for coal.

The China demand story for metals and for coal are not the same, and Xu argues that China’s demand for Australian coal is unlikely to drop much, if at all, for four reasons:

  1. Over 80% of China’s growing electricity generation comes from coal-fired plants (and this share is growing);
  2. China’s domestic coal production is stagnant;
  3. While the spot price for coal has dropped in China in line with global prices, the price for coal supply contracts (the key for electricity generators) has gone up recently; and
  4. Winter is coming in China.

For those of you who read Chinese, here is a good source from the Chinese media. For those of us who only read English, here is a similar, longer-term argument.

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