Mainland power firms surged yesterday on speculation the country's largest listed coal producer, China Shenhua Energy, has cut its asking price for this year's contracts, as well as news of lower spot market prices and higher inventory at a key port.
Shenhua Group, the parent of China Shenhua, had verbally agreed to cut its quoted price on this year's seaborne coal contracts by 50 yuan (HK$56.72) a tonne to 490 yuan, China Business News reported, citing a power firm's contract negotiator.
A coal sector analyst said China Shenhua's average seaborne coal selling price was 480 yuan a tonne last year, implying the price increase it sought may have fallen to 2.1 per cent from 12.5 per cent.
China Shenhua's spokesman declined to comment on the company's price negotiations.
Coal accounts for about 70 per cent of coal-fired power generators' operating costs and is the biggest factor affecting their profits.
The power generation sector was mired in big losses last year as two power price increases last year by the government came too little too late to make up for steep rises in coal prices.
The share rally was led by China Power International Development, which rose 8.39 per cent to HK$1.55.
