Sanctioning others but also tired of themselves? Coal companies’ costs increase by 20 billion yuan in the first quarter as coal prices soar on the mainland

After the Chinese Communist Party boycotted Australian coal, coal prices rose, and last year, there was a crisis of power restrictions in the winter. In the spring, coal prices remained high, with high quality coal quoted at nearly RMB 800 per ton (same below), and coal trucks once again lined up in long lines to grab coal. Ye Chun, deputy secretary-general of CEC Fuel Branch, bluntly stated that the additional coal procurement cost for coal power companies across China in the first quarter was about 47 billion yuan, and with low inventory, it is expected that the existing coal inventory of power plants will face a serious challenge in the summer power consumption peak.

Domestic media reported that as of last Tuesday (20), the CECI Caofeidian Index 5500 calorie price reached 771 yuan per ton, which is not only higher than the upper limit of the green range of 570 yuan per ton set by the National Development and Reform Commission, but also hit a new high after the Chinese New Year, beyond the capacity of power plants.

The report quoted the CEC fuel branch deputy secretary-general Ye Chun explained, by the Inner Mongolia coal resources regulation and other effects, limited growth in domestic coal production, plus the lack of imported coal resources, since last winter, coal prices rose sharply, causing a huge impact on the operation of coal power companies. The first two months of this year, Huaneng, Datang, Huadian, State Power Investment average unit price of standard coal to the plant reached 805 yuan per ton, up 136 yuan per ton year-on-year. With the increase in volume and price, the procurement cost rose by more than 20 billion yuan year-on-year, and the loss of the four major power generation groups reached 40.6%. The initial estimate of coal procurement costs for all Chinese coal power companies in the first quarter will increase by an additional 47 billion yuan.

The report quoted Zhang Feilong, director of the E-Coal Research Institute, as confirming that coal supply was severe last winter, and some production areas were supplied with incremental quantities from digesting stocks, and then no significant replenishment was implemented by the production areas so far, while according to the CEC’s power industry fuel statistics monitoring, as of last Tuesday, the number of available days in stock at major coal-fired power plants nationwide was nearly 130, an increase of 62 year-on-year. To the current supply situation, the existing coal inventory of power plants in the face of the summer power peak will be a major challenge, and power companies are cash-strapped, financing difficulties, not enough to maintain normal power production, is bound to affect the security of power supply and national livelihood.