September 20 (CapitalVue) -- The coal shortage problem in China is becoming more serious, and rising coal prices, and the difficulties involved in coal transport across provinces may result in many power stations having to halt production in winter, reports Economic Information.

Power stations in Hunan, Shanxi and Guizhou provinces normally have coal inventory of 30 days' consumption. In 2011, power stations in these provinces are not as willing to store as much coal as they did before, with some having coal inventory for only 10 days of consumption.

Following the low season of July and August, the price of steam coal traditionally rises in September as it is the season for coal storage in preparation for winter, said an executive from Heilongjiang Longmay Mining Group.

The price of 5,500 kcal steam coal at Qinghuangdao Port had started to rise from end August, and had risen for two consecutive weeks, entering into a new round of price increases.

According to a people in charge of a large power station in Linfan, Shanxi province, the price of 4,500 kcal steam coal had increased to RMB 500 per ton, up RMB 20 to RMB 30 from 2 weeks ago.

Coal accounts for 80% of the total operating cost of a power station, and the rising coal prices meant zero marginal profits for power stations, said the person in charge.

Some local power stations had to halt production using equipment maintenance as an excuse, and the only recourse for power statons is to continue to appeal for coal prices to be pegged to power prices, added the person in charge.

The high coal prices, agent fees, transportation fees and complex procedures added to the difficulties involved in coal transportation across provinces, according to a person in charge at a Hunan power station.

Hunan province had purchased 26.61 million tons of coal in 2010, of which 17.11 million tons were obtained from other provinces.

Shares of Taiyuan Coal Gasification Co. Ltd.  rose 1.06% to close at RMB 19.93 today.