Coal faces toughest period, electric power turns healthy profit

It is going to be an extremely tough year for coal traders in 2013, but electric power enterprises will receive their highest profits in 11 years.

"The price of coal is expected to be lowered bringing fewer profits this year," said Yang Bang, a coal trader who focused mainly on the export industry.

According to statistics released by the China Coal Industry Association, the profit margin of coal enterprises dropped dramatically although the output increased by about 4 percent in 2012. The operation cost of large coal enterprises increased by over 25 percent and the profits dropped by over 23 percent.

"Global inflation will increase the costs of production, transport and labor, which will minimize the profits," said Yang.

However, electric power enterprises are making large amounts of money while the value of coal is lowered.

"The price of 5,500 kilocalorie coal based electricity in Qinhuangdao port was 860 yuan per ton in October 2011 while the current price is about 620 yuan per ton. The profits became even higher after the electricity price was raised two times since 2011," said Huang Teng, a coal expert.

As the figures by China Economic Information Network showed, the total profits earned by the five top electric power groups were estimated to be 46 billion yuan for 2012, reaching their peak in the past decade with an increase rate of 154 percent.

The electric power industry topped 41 types of industries, with an increase rate of 69.1 percent in 2012 according to an annual report on industrial enterprises from the National Bureau of Statistics.

The statistics also showed the sales revenue of the electric power industry for 2012 exceeded 5 trillion yuan with an annual increase of over 10 percent. The total profit was 247 billion yuan, 69 percent higher than the previous year.