Posted on 06 Aug 2021
As another measure to increase supplies of coal for this summer’s peak power-demand season, China’s National Development and Reform Commission is extending the ‘trial’ period for operations at 15 coal mines in five provinces and regions in North and Northwest China by one year, according to an NDRC post on August 4.
Ordinarily, new mines or mines whose production capacity has been recently expanded have to undergo a period of combined trials to ensure they meet safety, environmental protection and other criteria before being officially commissioned, with those operations failing to pass given time to rectify the problems, Mysteel Global understands.
The new NDRC order has enabled all these mines – whose combined capacity is 43.5 million tonnes/year in total – to start or resume production after the combined trial ops period has finished. This is expected to add 150,000 tonnes/day to the nation’s coal output, NDRC noted. As reported, China’s total raw coal output is around 10-11 million t/d.
Recently, the central government has released a series of notifications and adopted measures to boost domestic coal supply during current peak season for energy consumption and to cool the overheating market. Only last month, NDRC granted permits for 38 open-cut coal mines (with 66.7 million t/y of raw coal capacity) in Ordos, North China’s Inner Mongolia, to restart operations after temporarily suspensions, adding another 200,000 t/d supply, as reported.
NDRC has also launched investigations at ports in North China’s Bohai-Rim, urging port operators to accelerate coal shipments and be on alert for those “irrationally” bidding up prices, another NDRC post on August 3 noted. Ports at the Bohai-Rim including Qinhuangdao, Huanghua and Caofeidian are the country’s core arteries for coal transhipment from North China to the country’s eastern and southern regions.
The impact of these measures is yet to show in spot prices for thermal coal, however. As of August 5, Mysteel’s price assessment of the 5,500 kcal/kg Shanxi blend thermal coal at Qinhuangdao port was unchanged at Yuan 1,090/tonne ($168.5/t), though still at a new high since the assessment started December 15 2008.
Nevertheless, noting the potential increase in supply, some market participants have started to adopt a wait-and-see stance regarding trading, according to a market watcher based in the Bohai-Rim region.
“The enthusiasm for replenishment among end-users has cooled, with a notable decline in the volumes of spot coal being transacted recently,” he said.
In contrast, “coal sales from miners are buoyant, although deliveries from some thermal coal mining regions have slowed because of tightened pandemic control measures,” an industry source based in North China’s Shanxi observed.
Source:Mysteel Global
