Vietnam to be hurt by expected drop in Chinese coal prices
A forecast drop in Chinese coal prices will likely hurt Vietnam's coal exports as China is the nation's largest coal importer, domestic analysts said.
Chinese industrial analysts have forecast a slight decrease in coal prices by the end of the year after a long period at high levels.
According to Chinese statistics, coal prices in the market in April decreased by roughly 2.7 per cent to US$36 per ton over May and will continuously spiral down.
The Chinese analysts attributed the decrease to an increasing local output and high imports that have made coal supply plentiful in China.
In addition, the Chinese government plans to cool down the economy by reducing investment in heavy industries including steel which will ease the demand for coal.
Vietnam's coal exporters are expected to suffer the resulting price plunge as China remains Vietnam's largest market.
In the first five months of 2005, Vietnam exported US$302 million worth of coal, of which US$124 million went to China.
Coal remains Vietnam's key export and is shipped to 20 markets of which China and Japan are the largest ones accounting for 60 per cent of the country's total coal export turnover.
However, the Ministry of Trade's trade information centre still reports high demand for coal from China for use at the newly-built thermo-electric plants in the coastal areas of Guangdong and Guangxi.
Vietnam's coal exports to China during the January-June period increased 83 per cent as compared to the same period last year to reach 4.3 million tons.
According to the Vietnam Coal Corporation (Vinacoal), coal exports to China this year may reach 9 million tons, making up nearly 60 per cent of the country's coal exports.
Vinacoal has tried to tailor its sales policies for long-term Chinese customers, to raise its share in market to an estimated 40 per cent, compared to 30 per cent last year.
Starting from May, Vinacoal has also allowed its member businesses to ship coal to China across the border or from small ports in order to decrease pressure on major ports and speed up the delivery of coal to customers.
Vietnam's coal is competitive in Chinese market primarily thanks to its short distance of transportation.
Vietnam News Agency - July 28, 2005.
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