State Council Approves First National Coal Trade Center at Taiyuan

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Researched by Industrial Info Resources (Sugar Land, Texas). China’s Taiyuan Coal Trade Center received official approval from the State Council recently, announced by Taiyuan Coal Trade Market in Taiyuan, the capital city of Shanxi province, on May 17, 2007. The goal is make the Taiyuan Coal Trade Market the first national level coal trade center in China.

According to the Shanxi province government plan, China Taiyuan Coal Trade Center will be jointly constructed together with Shanxi International Conference and Exhibition Center. A limited company will be established by attracting major players in the sector nationwide as its shareholders. The first phase investment will be $130 million and the construction is expected to start at the end of this September.

The establishment of China’s Taiyuan Coal Trade Center will be the first step to form a united national coal market in order to replace the annual coal order-placing meeting, remarked Ou Yangye, General Manager of Taiyuan Coal Trade Market. The annual coal order placing meeting directs coal distribution for power plants, where coal producers and power plants meet together under the planning of the state planning department.

Coal supply for power production has long been under the control of national planning. The annual Coal Order-Placing Meeting has been held continuously for several decades. However, more and more difficulties have been experienced in recent years. For example, contract negotiation over price has run into an endless deadlock since 2003, especially for the meeting held in Jinan in 2006, where only about 50% of expected orders were placed. This is one of the reasons for the nation-wide power shortage in last two years. It is becoming more and more difficult to efficiently coordinate coal suppliers and buyers by related departments. The only solution is to carry out market-oriented coal supply reform, said Zhan Genghu, General Manager of Shanxi Coal Transportation and Sales Corporation and founding member of China’s Taiyuan Coal Trade Center.

The establishment of China’s Taiyuan Coal Trade Center will solve several persistent issues in coal production, transportation and consumption by establishing a united, open, competitive and ordered trade platform in China. All coal related parties will trade here to create a “Chinese price.” The center is expected to be a large market with annual transaction volume over $100 billion in the future, which is similar to scale of the Oil Trade Market in New York.

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