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Energy

Chinese utilities urged to secure coal supplies as early as possible

Firms encouraged to sign long-term contracts with miners to meet winter peak demand

PUBLISHED : Monday, 16 October, 2017, 1:27pm
UPDATED : Monday, 16 October, 2017, 10:24pm

China’s state planner encouraged utilities to sign long-term purchase contracts with coal producers for next year as early as they can to secure enough supplies for this winter as coal power plants ramp up inventory for peak demand season.

The National Development and Reform Commission (NDRC) – in a statement on Monday citing an internal meeting – also repeated a pledge to secure supplies for power plants in six northern regions including Heilongjiang, Liaoning and Jilin provinces, and the industrial sector made up of capital Beijing, Tianjin port and Hebei province.

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The NDRC statement came as rallying coal prices, increasing safety checks and robust imports spurred more concerns of tight winter supplies.

China’s top coal-producing province, Shanxi, said on Saturday that it planned to close nine more coal mines by the end of this year, equivalent to 5.25 million tonnes of annual production capacity.

In September, some power plants in Heilongjiang province issued a plea to the NDRC asking for help with securing coal supplies.

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Prices of thermal coal in China have jumped more than 50 per cent since the start of this year, while coking coal futures have gained about 5 per cent. The NDRC also said in its statement that relatively high level of stocks at the largest coal port Qinhuangdao and at major utilities showed the market was balanced this year.

The state planner as well encouraged efficient coal mines to increase their mining capacity.

The NDRC intervened in the coal market last winter when a market rally fuelled worries of an imminent coal crunch. A flurry of measures such as capping contract prices and increasing production were taken to help ensure fuel supplies and ease market values.