Coal prices on the mainland have risen sharply in recent days as a cold snap across the country combined with tight coal supply. As of January 5, coal prices broke through the round number of 2,900 and closed at 2,959.5, a record high, according to mainland media reports.
In December 2020, electricity rationing and orderly use of electricity occurred in all parts of the mainland, reflecting the phenomenon that the coal market in the mainland is in short supply, and the coal price also rose sharply. According to the National Bureau of Statistics, coal prices on the mainland will gradually rise by between 0.2% and 5.2% in mid-December. Currently, the mainland coal market has started its 12th round of price increases, with some companies raising the price to 100 yuan per ton.
For coal prices continue to rise, analysis is said to be related to the slow growth of domestic coal production. According to a comprehensive report by the mainland media, shanxi, Hebei, Henan and other provinces have eliminated more than 40 million tons of backward production capacity since October, but only 18 million tons of new production capacity has been added, and the production speed is slow. On the other hand, citic Futures Black Building Materials group said that following a major coal mine accident in Chongqing in December last year, the country has strengthened coal safety inspection, and all kinds of over-production activities are strictly controlled, and it is estimated that the impact on domestic coal production will be maintained until the Spring Festival.
At the same time, the temperature in all areas of the mainland is decreasing and the cold wave is intensifying. According to the website of the Central Meteorological Observatory, affected by the cold air in many areas of the mainland, the central and eastern regions generally experienced a drop of 6-8 degrees, while the western part of North China and the eastern part of South China experienced a drop of up to 10 degrees. That has boosted household demand for coal for heating and electricity, which is expected to rise sharply.
In addition to domestic factors, high coal prices are also related to restrictions on coal imports from the mainland. According to mainland media reports, the supply of imported coal from the Mainland is limited due to the epidemic and the impact of port clearance.
There is no light at the end of the tunnel between Australia and China
On the other hand, there has been speculation that continued supply constraints could stem from China stopping buying coal from Australia. Australia is the leading source of coal imports for China. Song, a retired scholar at the Beijing Iron and Steel Research Institute, once told SCIDEV.NET that Chinese companies rely heavily on Australia and Canada for coal and coal for power generation. However, the reality is that the improvement of Relations between Australia and China has not yet seen the light of day, and we cannot rely on imports to bring down coal prices in the short and medium term
To keep coal prices stable, seven large coal groups, including China National Coal Energy Group And Jinneng Holding Group, on Friday issued a joint initiative to ensure supply and stabilize prices, accelerating the signing and collection of medium – and long-term coal contracts for 2021, in a bid to stabilize market expectations and prevent volatile coal prices.
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