(Yicai Global) July 12 -- After some stalemate, coal prices have re-entered the upward trajectory since the beginning of this month, and coal buyers and sellers began to tussle. The benchmark Bohai-Rim Thermal Coal Prices rose for the fourth consecutive week this week, with a cumulative rise of CNY18 (USD2.65) per ton.

Analysts have different interpretation of the latest development. "From the supply side, supply in some areas is slightly tight. As coal production in Shenmu, Shaanxi province, is strictly controlled although demand is high, this has pushed up coal prices. Inflation of prices in producing area is gradually spread, with an overall increase of CNY10 to CNY40 per ton. But production control in Inner Mongolia region has been eased up and the supply has been relatively abundant. Only some coal mines made a slight adjustment in prices earlier this month, and the market is relatively stable," Wang Qiuli, a coal industry analyst at www.chem365.net told Yicai Global.

From the demand side, Wang believes that with supply capacity of generating units at Three Gorges Hydropower Station gradually increased, the impact of hydropower on thermal power should not be underestimated. In recent days, power plant consumed 650,000 tons of coal per day. As China's southern regions are in the rainy season, the hot summer heat is not totally around, so any increase in daily coal consumption of power plants is limited. It is expected that the trend in coal prices will be affected mainly by two factors: the supply capacity of hydropower and whether the daily coal consumption of power plants will increase.

As coal prices rise again after fluctuations and adjustments in the first half of the year, some analysts told Yicai Global they predict coal supply and demand gap would further widen. Coal price rise is expected to continue, and will run through the peak season, which will have a positive impact on the performance of coal listed companies in the second half.

Data from Wind, Shanghai-based data information provider, show that in the first half of this year, the average price of 5,500 kcal steam coal at Qinhuangdao Port was CNY611.21 per ton, up 61 percent from a year earlier, and rose 8 percent compared with the second half of last year.