AGL 40.00 No Change ▼ 0.00 (0%)
AIRLINK 131.00 Increased By ▲ 1.47 (1.13%)
BOP 6.80 Increased By ▲ 0.12 (1.8%)
CNERGY 4.67 Increased By ▲ 0.04 (0.86%)
DCL 8.98 Increased By ▲ 0.04 (0.45%)
DFML 43.10 Increased By ▲ 1.41 (3.38%)
DGKC 83.98 Increased By ▲ 0.21 (0.25%)
FCCL 33.00 Increased By ▲ 0.23 (0.7%)
FFBL 77.70 Increased By ▲ 2.23 (2.95%)
FFL 11.52 Increased By ▲ 0.05 (0.44%)
HUBC 111.14 Increased By ▲ 0.59 (0.53%)
HUMNL 14.78 Increased By ▲ 0.22 (1.51%)
KEL 5.46 Increased By ▲ 0.07 (1.3%)
KOSM 8.50 Increased By ▲ 0.10 (1.19%)
MLCF 40.00 Increased By ▲ 0.21 (0.53%)
NBP 60.76 Increased By ▲ 0.47 (0.78%)
OGDC 198.60 Decreased By ▼ -1.06 (-0.53%)
PAEL 26.80 Increased By ▲ 0.15 (0.56%)
PIBTL 7.92 Increased By ▲ 0.26 (3.39%)
PPL 158.65 Increased By ▲ 0.73 (0.46%)
PRL 26.59 Decreased By ▼ -0.14 (-0.52%)
PTC 18.70 Increased By ▲ 0.24 (1.3%)
SEARL 82.80 Increased By ▲ 0.36 (0.44%)
TELE 8.41 Increased By ▲ 0.10 (1.2%)
TOMCL 34.78 Increased By ▲ 0.27 (0.78%)
TPLP 9.15 Increased By ▲ 0.09 (0.99%)
TREET 17.57 Increased By ▲ 0.10 (0.57%)
TRG 61.85 Increased By ▲ 0.53 (0.86%)
UNITY 27.50 Increased By ▲ 0.07 (0.26%)
WTL 1.38 No Change ▼ 0.00 (0%)
BR100 10,490 Increased By 83.1 (0.8%)
BR30 31,857 Increased By 144.1 (0.45%)
KSE100 98,057 Increased By 728.1 (0.75%)
KSE30 30,431 Increased By 239 (0.79%)
Markets

China coal prices claw back after Beijing signals pacing down price drive

  • Traders take cue from a meeting earlier on Wednesday as the country's top economic planner says prices should not fall too much too fast
Published November 3, 2021

BEIJING: China thermal coal futures rebounded nearly 9% on Wednesday after falling for 10 straight days, as the government indicated to pace down price intervention at a meeting earlier in the day, traders said.

Traders took cue from a meeting earlier on Wednesday as the country's top economic planner, the National Development and Reform Commission, told miners and power plants at a web-based conference that prices should not fall too much too fast, several traders with knowledge of the meeting told Reuters.

The planner stressed that prices in the long-run shall remain at a "reasonable" level.

"The key takeaway from the meeting is that the NDRC signals there is limited space for prices to fall further. That lifted market sentiment," said one trader.

Ex-mine thermal coal of 5,500 kcal were heard traded at close to 1,000 yuan/tonne on Wednesday, after NDRC last week set an immediate target price at 1,200 yuan.

Inner Mongolia coal firms cut prices to below 1,000 yuan/tone

The planner also called for power firms and miners to secure 100% coal supplies under term contracts, to stave off big price fluctuations, though traders said that would be hard to achieve.

The prices were also supported by an expected jump in fuel use amid forecasts for plunging temperatures.

China's National Meteorological Center is predicting snowfall in the north and cold winds in the next two days that are expected to cause temperatures over the weekend to plummet in the northwest, southwest and most central and eastern regions.

Inventories Rise

The most active coal contract for January delivery closed up 8.86% at 978 yuan ($152.85) per tonne at 0700 GMT, rebounding after the contract nosedived over 50% off the record of 1,982 yuan hit on October 19 after the government enacted a raft of measures to cool prices.

Prices year-to-date are up 39%.

China coking coal and coke futures also rose on Wednesday, closing up more than 12% and 7%, respectively.

China targets 1.8% cut in average coal use at power plants by 2025

"We believe strong heating demand and restoration of coal-fired power plants could be reason for this rebound after prices plunged from its historic high," said analysts from ANZ.

They added that should China keep daily domestic output in the 11.5 to 12 million tonnes range along with monthly imports of 20 million to 25 million tonnes, this would be sufficient to meet additional winter demand.

Other analysts warned of more volatility ahead depending on controls issued by the government.

"For example, requiring some output to be reserved for domestic heating and power stations at lower prices will reduce the amount of coal available on the market, so if the winter is a cold one and demand exceeds expectations, another price spike could be in the cards," Alex Whitworth, head of Asia Pacific Power and Renewables Research at Wood Mackenzie, told Reuters.

China's key power plants with direct connection to the state railway network were holding 19.1 days worth of thermal coal inventory by October-end, up 5.1 days from a month earlier, Chinese media cited China Railway Group as saying on Wednesday.

The railway group transported 122 million tonnes of thermal coal last month, 25% higher than a year earlier and 21% more than the previous month, Shanghai government-backed the Paper reported.

Comments

Comments are closed.