Chinese utilities called to invest in coal mining

It is reported that under the pressure of continuous coal price hikes, power generation enterprises in China are widely expecting the government to raise electricity price through the power coal price pegging mechanism. However, industry insiders say electricity price hike is unlikely in the near future considering the great inflation pressures in the country at present.

In a recent research report involving the participation of some important government departments suggests that power producers should be encouraged to invest in coal mines through mergers and acquisitions, which as observers predict may be an advisable choice and inevitable trend for power producers to achieve satisfactory profit margins and fend off the pressures of coal price rises.
Official statistics show that largely due to coal price hikes, the total profit of China’s electric power industry dived by 55.85% to CNY 9.541 billion in the first two months of this year from CNY 21.61 billion in the same period of last year. In comparison, the total profit of the coal industry surged 66.8%YoY in the two months, resulting in a margin gap of 122 percentage points between the two industries.

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