China’s thermal coal prices have surged to fresh record highs as recent floods in key coal producing province Shanxi worsened a supply crunch, just as new efforts by Beijing to liberalise power prices boosted demand from power generators.
China, the world’s largest coal consumer, has been grappling with a growing energy crisis brought on by shortages and record high prices for the fuel.
The government has taken a range of steps to boost coal production and manage electricity demand at industrial plants, while power producers and other coal users have been ramping up imports.
Local governments in top coal producers Shanxi and Inner Mongolia have ordered some 200 mines to boost output, but incessant rain flooded 60 mines in Shanxi. Four mines with a combined annual output capacity of 4.8 million tonnes remained shut, a Shanxi official told a press conference on Tuesday.
The most-active January Zhengzhou thermal coal futures touched a record high of 1640 yuan ($A345.56 ) per tonne earlier in Wednesday trade, having surged almost three-fold year-to-date.
Data released on Wednesday also showed coal imports rose to their highest this year last month as users scrambled to overcome supply constraints.
China brought in 32.88 million tonnes of coal in September, up 76 per cent from a year earlier, data from the General Administration of Customs showed on Wednesday. The monthly total was the fifth largest on record, according to Reuters calculations.
Reuters reported last week that China has been releasing Australian coal from bonded storage but hasn’t lifted an almost year-long, unofficial import ban on the fuel.
Exports from other key suppliers, such as Russia and Mongolia, have been curtailed by limited rail capacity, while shipments from Indonesia have been hindered by rainy weather, traders said.
Power plants also seek to diversify coal sources from niche market such as Kazakhstan.
China’s Premier Li Keqiang said in an online meeting with Mongolian Prime Minister Oyun-Erdene Luvsannamsrai that he would be “happy to see” an expansion in the volume of coal traded between the two countries, the official Xinhua news agency reported late on Tuesday.
The rise in prices and coal import data comes a day after Beijing announced it would allow power plants to charge commercial customers market-based prices for power, in a significant break from previous policy that allowed industry to lock in fixed-price power deals with suppliers.
The policy shift, which is expected to spur more coal-fired power generation, is the latest in a raft of measures designed to ease the power supply crunch that has forced several industry sectors in China to curb power use in recent weeks.
Australian Associated Press