Posted on 16 Dec 2020
The China Electricity Council (CEC), a non-profit organization formed by the country’s power enterprises, is calling for thermal coal supplies to be stabilized during winter and is advocating that prices of thermal coal be allowed to “rationally return”, according to a recent council public statement.
Though the statement gave no indication of where the council members wanted coal prices to “rationally return” to, the CEC complained that domestic thermal coal prices had risen fast and that at prevailing levels, prices since mid- to late November had seriously deviated from where market fundamentals indicated they should be. “(The fast rise in coal prices) will be an unforeseen impediment in securing steady electricity supplies during winter and for the longer term,” it noted.
According to Mysteel’s data, since late September the assessed price for 5,500 kcal/kg Shanxi blended thermal coal – a benchmark for domestic coal prices – has exceeded Yuan 600/tonne ($91.7/t) including the 13% VAT at Qinhuangdao port in North China’s Hebei, a warning line set by China’s National Development and Reform Committee (NDRC). For the period when prices exceed the level, efforts will be adopted to control the hikes, the NDRC has said.
On December 14, the price touched a near 2.5-year high of Yuan 696/t including the 13% VAT, higher by a hefty Yuan 81/t on month, data showed.
The reasonable range for the price of 5,500 kcal/kg coal to safeguard healthy development of both the supply and demand sides over the long-term would be in the Yuan 500-570/t range, according to NDRC.
In its statement, CEC called for strengthening security of domestic coal supply and transportation. It recommended improved communication and liaison among the utilities suppliers, coal miners and logistics companies to continue to raise the fulfillment rate of contracted coal.
CEC also requested that electricity enterprises coordinate efforts on projects involving market forecasting, coal replenishment and emergency measures. The enterprises also need to seek support for new coal import quotas to ensure that no power generator is obliged to idle its operations because of a coal supply shortage.
To control coal prices, coal miners, transportation and utilities enterprises must reject all forms of market manipulation, avoid “irrationally” bidding up coal prices, trade coal at prices notably higher than its true value, and refrain from illegally adding poor quality coal to high-priced consignments, according to the statement.
Though China is actively reducing its reliance on fossil energy to control carbon and pollutant emissions, coal remains the country’s most important energy source and meets over half of the country’s energy demand, as reported.
Over January-October, China produced 3.1 billion tonnes of raw coal in total, generally stable on year being just 0.1% higher than in the first ten months of 2019. On the other hand, the country’s total coal imports declined by 8.3% on year to 253.2 million tonnes over the same period, according to official data.
Written by Sean Xie, xiepy@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Source:Mysteel Global
