China’s coal supply and demand scenario has improved significantly due to the joint efforts of the market participants resulting in significant downward correction in domestic coal price, according to National Development and Reform Commission (NDRC).
Based on the recent data received, China’s power plants’ coal storage is expected to exceed 110 million tonnes (mn t) within 3 days, and touch 20 days of stock in the near future, which will lay a solid foundation for ensuring adequate supply of electricity through this winter heating period.
How did supply improve?
Recently, the NDRC and relevant departments have undertaken multiple measures to develop coal mines to tap their potential and increase production. All parties involved in production, transportation and demand have worked together to increase and ensure supply.
Moves to stabilise prices have also achieved initial results.
Data showed that from mid-to-late Oct’21, the national daily average coal production has remained above 11.5 mn t for several consecutive days, an increase of nearly 1.1 mn t from the end of September, reaching a maximum of 11.72 mn t, the highest daily output in recent years.
Coal futures and prices sees a downtrend
The most-traded January thermal coal futures contract on the Zhengzhou Commodity Exchange fell 9.26% (against 29 October futures contract price) to RMB 925 ($144.48) per tonne early on Monday. The same had hit a record RMB 1,982/t on 19 Oct’21.
On the price front, the domestic price for 5500 k/cal thermal coal at the port-side has fallen below RMB 1,300/t ($203/t), and the price of 5500 k/cal thermal coal at the pithead has fallen below RMB/t ($187/t), down nearly RMB 1,000/t ($156/t) within a week.
Storage at power plants
Coal storage in Qinhuangdao Port exceeded 5 mn t. The coal yard inventory of Qinhuangdao Port has steadily increased. Especially after completion of the overhaul of the Daqin Line, the coal intake has increased significantly.
With the gradual improvement in supply and demand, the level of coal storage at power plants nationwide has rapidly increased. The NDRC stated that since 5 Oct’21, coal supply to power plants nationwide has exceeded coal consumption for 25 consecutive days. Since 19 Oct’21, coal supply to power plants has exceeded coal consumption by more than 1 mn t.
Recently, supply has broken through for several consecutive days to 8 million tons, rising to 8.32 mn t of historical peak, which is 2 mn t more than consumption. Coal storage levels reached 106 mn t, an increase of more than 28 mn t from the end of September, and it can be used for 19 days.
Coal storage at power plants in the three north-eastern provinces has exceeded 12.7 mn t, nearly double that at the end of September, and the number of days available has increased to 32 days.
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