China Resources breaks alliance to sign coal agreement
China Shenhua Energy Co (SH:601088; HK:1088) will provide 85 million tonnes of steam coal to its strategic partner China Resources Power Holdings (HK:0836) in the coming five years, according to an agreement signed between both parties on Saturday in Hong Kong.
Sources yesterday told local media that the price will be set around RMB540 per ton, 10 percent higher than that of last year, but still five percent lower than the present spot price. However China Securities Journal quoted unnamed sources today saying that no price had been agreed.
Shenhua had also proposed RMB540 at the national coal fair held late last year, prompting China Resources Power to enter into an alliance with the nation’s five largest power generators not to budge on contract coal prices.
This conciliatory move by Shenhua may be a sign that the alliance of power companies is breaking. The largest five, who are now buying upstream coal assets, have maintained their line on the coal prices.
Shares in China Resources Power rose 0.25 percent yesterday, while China Shenhua Energy fell 0.82 percent on Shanghai trading and 5.65 percent in Hong Kong.
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