China's Coal Industry Chain Cycle Distortion Transfer And Thermal Coal Prices

The snowstorm and icy weather that hit southern China from mid-January of2008posed serious threat to the national power supply. Coal transportation halted and the low coal reserve of the area affected the operation of the generators. The power grid collapsed due to excessive snow coverage, which disrupted people’s daily life and caused serious economic loss. Also the Financial Crisis caused the depression of power and coal industrial. Despite its unpredictable nature and economic crisis, the disaster, in terms of the industrial chain of electricity and coal, made us to look at the safety of energy supply and their importance to economy and life.The energy problem China is facing now is similar to that of the western countries in the60’s and70’s. Our aim is to effectively improve the structure of energy under the condition that the safety of energy supplies is ensured. The current energy demand and supply and pricing system face all sorts of conflicts:the safety of energy supply versus environmental pollution:China as major energy import country versus her weak position in international energy pricing; the market price of coal versus the planned price of electricity; the abnormality of energy price versus the poor efficiency of energy usage. The above-mentioned conflicts serve as the background of this dissertation. China’s "bountiful coal, lack of oil and of gas" decides that the consumption of coal is far above the world average. The threat to environment is increasing.China is the second largest country of energy production and consumption. The rising energy supply backs up the economic and social development. The soaring energy consumption creates great potential for world energy market. China is becoming an inseparable part of world energy market and is playing a more and more active role to maintain the safety of world energy.Energy demand is the greatest problem for a far growing China. The core issue lies in the demand of electricity and coal. This dissertation focuses on the derivation and empirical analysis of the function of electricity demand and coal demand.Firstly, this dissertation analyzes the coal industry and the electricity industry, which are the context of electricity and coal demand. When discussing the features of coal industry, it starts from the overall situation of coal industry and analyzes the fundamental situation of coal reservoir, the structure of coal industry and the evolution of industrial policies with a large amount of figures, and then go further to the features of coal industry and its pricing system. When talking about electricity industry, it focuses on analyzing the features of electricity generated by coal, of its supply and demand and the history of reform on power supply. This paved way for further discussing electricity.Secondly, before modeling the electricity demand function, this dissertation analyzes its structure, the working factors and the fluctuation of the demand.Referring to the power demand after Opening-up, especially in the twenty years after1985, the writer adopts Cointegration and ECM to model the electricity demand function of the first, second and tertiary industry and proposes his prediction within certain area. He also uses Granger of ECM to verify the causal relation between the increase of industrial development and electricity demand. The result shows:the increase of demand within a short period is the Granger cause of increase of industrial development, but not the other way around, which explains the current economic issues of China.In the short term, the development of heavy industry is an important factor to influence the electricity demand. In the long term, the structural adjustment of industry has a strong impact on demand. The huge population of china is always a standing factor. As expected, the electricity price influences the power demand, but only within a short period of time.What’s more, this dissertation analyzes the household electricity demand. The result shows that the short-term income elasticity of the household electricity consumption is higher than the statistics of foreign countries, while the long-term income elasticity is lower. Compared with statistics of developed countries, the price elasticity of household electricity consumption is lower.The following discussion of the dissertation concentrates on the coal demand function by analyzing the abnormality of coal price. It talks about basic theory of derive demand, builds up coal demand function and gets working factors, such as power demand and coal price. It is possible to control the coal demand by adjusting the coal price according to the electricity demand.At the end, this dissertation proposes to set up an early warning system against future power shortage. In the short term, time-sharing pricing is a way to adjust industrial structure, especially the inner structure of industrial products. It can accelerate the transformation from extensive economy to intensive economy, promote the change from the GDP growth to re-structuring of economy and balanced development, and as well enhance the quality of economic growth. In the long term, energy saving is a strategic policy of national economic development.