- Xinjiang is China’s 4th-largest coal-producing region, with output of 298 mnt in Jan-Jul
- Domestic thermal coal prices near RMB 1,000/t on constrained availability
The National Development and Reform Commission (NDRC), China’s top economic planner, has stepped in to raise the volume of coal shipped out of the Xinjiang Uygur Autonomous Region in China’s deep northwest, urging railway operators and regional officials to stabilise output and strengthen transport to grapple with the current national supply tightness.
The NDRC recently instructed its officers in Xinjiang, as well as China State Railway Group and China Railway Urumqi Group, to review outbound shipments and arrange measures to stabilise Xinjiang output, secure rail capacity and expand outbound volumes, NDRC said in a statement on 7 September. The commission intended to coordinate more closely and deal with bottlenecks as they arise, it said.
The push comes as China’s coal output has contracted sharply after the fatal coal mine disaster in May triggered nationwide safety inspections, as reported. National raw coal production in January-July fell 2.9% y-o-y to 2.7 billion tonnes, National Bureau of Statistics (NBS) data show.
Shanxi province, long the nation’s leading coal supplier accounting for more than 25% of the national total, saw output drop 10.2% to 680.3 million tonnes (mnt) over the same period, with July output alone tumbling 35.8%.
Xinjiang, China’s fourth-largest coal-producing region, is being asked to cover part of that decrease, which could see its output increase swiftly following considerable reductions in recent months, Mysteel Global notes.
The region produced 298.3 mnt in January-July, down 5.7% y-o-y, according to the NBS data.
During the first half of this year, Xinjiang moved about 49.65 mnt of coal beyond its borders by rail, up 8.5% y-o-y, local government data showed. About 40% of outbound Xinjiang coal goes to the northwest, mainly to Gansu and Ningxia, with a further 37% heading to the southwest to markets such as Sichuan and Chongqing. The rest is split among buyers in central and north China.
Whether the NDRC might move to lift coal output in other major producing regions is still unknown. According to one market rumour — which one source dismissed as false — the NDRC might loosen the production limit placed on miners by allowing them to mine 20% above approved capacity rather than the existing 10%.
Coal prices have been soaring due to a lack of effective availability. During the past week, for example, prices of thermal coal edged toward the RMB 1,000/tonne ($149/t) threshold, rising by some RMB 20/t per day. On 7 September, Mysteel assessed the benchmark 5,500 kcal/kg NAR at RMB 968/t FOB northern ports with VAT.
The upper limit set by the NDRC is RMB 1,155/t for spot coal, a level 1.5 times higher than the upper end of RMB 550-770/t range applied to medium- and long-term contract prices, Mysteel Global notes.
Note: The article is published as part of a content sharing agreement between Mysteel Global and BigMint.
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