Thermal coal supplies for power generators are tight in China and prices are 25% higher this month than a year ago, industry reports said.
Domestic prices have risen the equivalent of US$11.30 per tonne since the end of August, analysts Fenwei Energy said in a note last week.
“Industry insiders generally attributed this to earlier-than-expected pre-winter restocking, which typical start in November, and speculative hoarding by traders, in addition to persisting tightness of supply caused by tougher safety and environmental inspections,” Fenwei said.
The Chinese coal mining sector has struggled to recover from severe production curbs imposed across the industry in the second half of last year, in what turned out to be over-optimistic efforts by the National Development and Reform Commission to cut coal use. The government was forced to relax the curbs after a surge in imports to meet generating demand.
But following the production curbs a number of local authorities following through on state directives imposed stringent new safety checks in many mines, Fenwei said. There are still many mines unable to return to full operation due to safety and environmental inspections.
High quality domestic thermal coal was last week priced as high as 701 yuan (US$109.9) per tonne by some traders, it said.
Thermal coal imports in August totalled almost 10 million tonnes, lower than an import surge earlier this year when domestic supply could not cope with generators demand.
Monthly thermal imports peaked in April at 25 million tonnes, customs data showed, leading to Premier Li Keqiang at a State Council meeting urging national “efforts to rebalance supply and demand”.
Despite the closure of large numbers of old or inefficient mines and thermal power plants (TPPs), national coal-fuelled generating capacity was 940,000 MW, and accounted for 65.5% of total electricity output, the China Electricity said.
While smaller, inefficient TPPs are being closed down as part of campaigns to clean up severe urban air pollution, larges plants are being upgraded and new ones built using supercritical or ultra-supercritical boiler technology.
China is aiming to have the world’s biggest clean coal technology power generating system by 2020, the Economic Information Daily said last week.