China’s thermal coal prices surged to a new record high on Wednesday, as recent flooding in the key coal-producing province exacerbated supply shortages, as well as efforts to Beijing’s renewed push to liberalize electricity prices has boosted demand from power generation plants.
China, the world’s largest coal consumer, is grappling with a growing energy crisis caused by shortages and record-high fuel prices. The government has taken a series of steps to boost coal production and manage electricity demand at industrial plants, while power producers and other coal users are ramping up imports.
Local governments in China’s top coal-producing regions such as Shanxi and Inner Mongolia have ordered about 200 mines to increase production, but incessant rain has flooded 60 mines in Shanxi. Four mines with a combined annual capacity of 4.8 million tons remain closed.
Thermal coal contract for delivery in January was the most active, touching a record high of 1,640 CNY/ton ($254.44)/ton in the session on October 13.
The price hike comes a day after Beijing announced it would allow power plants to charge electricity prices at the market price of commercial customers, a change from the previous policy that allowed the industry to trade electricity at market prices. fixed with suppliers.
The policy change, which is expected to spur more coal-fired power generation, is the latest in a series of measures to ease power supply strains that have forced some industries in China to limit power supply. electricity use in recent weeks.
Despite power constraints, data showed export growth from the world’s second-largest economy unexpectedly accelerated in September 2021.
COAL IMPORT UP
China’s industry giant, which supplies electronics, toys, clothing and equipment to the global market, total electricity consumption in September and so far is up year-on-year.
Electricity consumption in September rose 6.8% from a year earlier to 694.7 billion kilowatt hours (kwh), bringing total electricity use in the first nine months, the National Energy Administration said. year by 12.9% over the same period last year.
China is not the only country experiencing power supply difficulties, which has led to fuel shortages in some countries.
Data released on Wednesday showed China’s coal imports rose to their highest this year last month.
China imported 32.88 million tonnes of coal in September 2021, up 76% from a year earlier, data from the General Administration of Customs.
Coal exports from other key suppliers, such as Russia and Mongolia, have been limited due to road difficulties, while shipments from Indonesia have been hampered by rainy weather, traders said. .
Power plants are also looking to diversify coal sources from niche markets such as Kazakhstan.
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