China’s energy shortage has led to a surge in Chinese coal imports and record high domestic coal prices.
China’s coal imports reached 32.88 million tons in September, a 76 percent jump from a year ago, according to calculations by Reuters. China’s coal imports rose to the highest level so far this year in September, official data released Wednesday showed.
The most active January Zhengzhou power coal futures touched a record high of 1,640 yuan ($254.44) a ton Wednesday and have nearly tripled so far this year.
China, the world’s largest consumer of coal, has been facing a growing energy crisis as well as record fuel prices lately. The government has taken steps to increase coal imports, boost domestic coal production and manage demand for electricity from factories.
But China’s coal imports face many obstacles, with limited rail access to key coal-producing countries such as Russia and Mongolia, and shipments from Indonesia hampered by heavy rains. Reuters reported last week that China has begun releasing imported Australian coal from bonded storage to deal with energy shortages, but has not lifted a nearly year-long ban on Australian coal imports.
Local governments in Shanxi and Inner Mongolia, China’s biggest coal producers, have ordered about 200 mines to boost output, but heavy rains have caused flooding at 60 mines in Shanxi province. An official in Shanxi said four coal mines that could produce 4.8 million tons of coal a year remain closed.
The Chinese government on Tuesday allowed thermal power plants to set market-driven prices for electricity, shifting the high cost of generating power to certain end users. Government planning officials said at a press conference Wednesday that they will ensure coal and energy supplies this winter, while ensuring that national climate change targets can be met.
China’s coal production has now reached 11.2 million tons, the highest since February, and the country’s average coal reserves at thermal power plants can support about 15 days of use, officials from China’s National Energy Administration said at the same press conference.
Higher energy prices have hit Chinese industries. Energy-hungry industries such as steel, aluminum, cement and chemicals are expected to face higher power supply costs and a more volatile electricity supply as a result of the new policy.
Analysts and traders expect China’s energy crisis to continue into winter, with coal supply shortages and local government policies that prioritize residential customers leading to a 12 percent drop in industrial electricity use in the fourth quarter.