China’s thermal coal miners expressed their optimisms about near-term mine-mouth market, as a new round of cold front is predicted to hit large swath of the country, even to Yunnan, Guangxi and Hainan around December 16.
The southern China will see temperature 4-6 degrees Celsius lower than the same period of the past years, while temperature in Xinjiang, Inner Mongolia and other northern and northeastern regions will decline by 2-4 degrees Celsius.
This round of cold wave is expected to last at least 10 days. This means a huge challenge for power utilities when air-conditioning usage for heating would surge. Data showed the six major power groups only had stockpiles equivalent to 14 days of use on average late last week, the critical level that separates abundance from tightness.
Traders at portside market have already responded to this by pushing up spot thermal coal prices. Price increases usually will take several days to pass onto miners.
“The cooler temperature will boost power consumption and coal burns at utilities, and may also impact transportation conditions,” said one Yulin-based coal miner.
He reported an offer of 1,360 yuan/t for 6,200 Kcal/kg NAR slack coal with 0.6% sulfur, up 5 yuan/t from a day earlier, on a free-on-rail basis. “The epidemic hit us severely, and we now only have 10 plus miners left and total crew is 60,” he added.
A notable production decline is expected to be brought about by workforce shortage amid Chinese government’ eased stance on COVID virus. This, in turn, may cause a supply tightness and help raise mine-mouth prices further, miners noted.
In addition, some mines are about to suspend production after finishing annual output target. “We are about to halt operations by the end of this week, and will resume by the start of 2023,” one miner in Ordos said.
A trading company in Zhunger Banner of Ordos offered washed mid-lump thermal coal (CV 6,000, S 0.2%) at 1,030 yuan/t and small-lump coal with the same CV and sulfur content at 1,020 yuan/t, both on mine-mouth basis with VAT.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
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