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China economy
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China’s coal-price indices stop revealing surging prices as demand soars and inventories ‘fall below warning line’

  • Analysts say the trend of high coal prices shows no sign of abating in the short term, while supplies continue to dwindle in China at an alarming rate
  • Restrictions on imported coal are also ongoing, and an industry group says they are unlikely to be reversed any time soon

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Smoke billows from chimneys at a coal-fired power station in Hefei, Anhui province. Photo: Reuters
Sidney Leng

All four of China’s major coal-price indices have stopped being updated after a concurrence of factors sent the price of coal surging in recent weeks – signalling that the government has stepped in to cool the overheated coal market.

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The factors said to be responsible for the soaring prices include China’s booming post-coronavirus industrial recovery, the annual sharp uptick in demand for coal to provide heat during the cold winter months, and an ongoing crackdown on illegal mines. Other factors at play include problems arising as local governments implement rules designed to curb pollution, and Beijing’s restrictions placed on coal imports, according to analysts.

The rare pricing freeze-out makes it more difficult for traders and analysts to predict market prices, but some say the trend of high prices shows no sign of abating in the short term, while coal supplies continue to dwindle at an alarming rate.

With coal prices having surged by more than 10 per cent in December, the China Electricity Council – a big industry group of China’s electricity producers – on Wednesday stopped updating the widely cited China Electricity Coal Index (CECI), citing “surging spot prices” and “chaotic pricing”, according to a public announcement.

The same day, the China Coal Transportation and Distribution Association (CCTD), another influential industry group, also halted publishing its Bohai Rim port area’s spot price for thermal coal – a measure of coal prices in northern Chinese ports – because of “volatile and abnormal price fluctuations in the market”, it said in a notice. It had also delayed updating the price earlier in the month, on December 3, because of soaring prices.

Before the December 30 data freeze, CECI’s spot price for 5,500 kcal/kg thermal coal rose to 751 yuan (US$115.50) per tonne, and CCTD’s spot price for 5,500 kcal/kg thermal coal price surged to 706 yuan per tonne. Both prices were record highs for 2020. The prices fluctuate depending on the source. The National Bureau of Statistics said the price of 5,500 kcal/kg Shanxi high-quality thermal coal rose to 699 yuan per tonne last month.

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