China’s rebounding coal price set to fall after Communist Party centenary celebration, says top economic planner
- Coal output is expected to recover as idle capacity is resumed, while current orders suggest imports will peak in July and August
- The National Development and Reform Commission (NDRC) said a ‘relatively large’ drop in China’s coal prices may follow in July
“As summary hydro, solar power output grows, and coal output and import increases, the shortage will be relieved, and the coal price is expected to see a relatively large decline in July.”
The NDRC’s comment came after coal prices rebounded days ahead of the Communist Party’s 100-year anniversary celebration on July 1, for which social and economic stability is paramount. Factory-gate price inflation in China hit a 13-year high in May on the back of surging global commodity prices.
Coal prices have risen by about half since March because of strong demand and supply-side limitations. This prompted the NDRC and other authorities to order major coal enterprises to boost output and release state coal reserves into the market in May, which has resulted in a 10 per rise in daily average supply and a moderate price correction, the spokesperson said. Even so, the measures have only provided a temporary relief and prices remain elevated.
“Current coal inventory at power stations is two million tonnes higher than in late May, and power station coal futures have fallen more than 100 yuan a tonne from the previous peak,” the spokesperson said. “However, prices have rebounded in recent days, especially for mid to long term contracts.”