China’s coal producers have lowered prices after government pressure, the country’s top economic planning agency said on Wednesday, as mines continue to ramp up production.
China’s daily coal output hit 11.67 million tonnes on November 2, rising around 1 million tonnes from early October, close to a record high this year amid a raft of measures to ramp up production, according to the National Development and Reform Commission (NDRC).
Coal inventories at power houses across the country had exceeded 110 million tonnes as of Tuesday, up by more than 31 million tonnes from end of September, the NDRC said, adding that China’s daily coal output is expected to break above 12 million tonnes.
Coal prices at mines and ports have dropped significantly, the economic planner said.
Producers, including Inner Mongolia Yitai, China National Coal Group and China Energy Group, had lowered their prices, followed by more than 10 major companies which “proactively” cut their prices of thermal coal of 5,500 kcal to below 1,000 yuan a tonne, according to the NDRC.
Thermal coal futures on China’s Zhengzhou Commodity Exchange had plunged more than 50% from the historical high of 1,908.2 yuan per tonne it logged on October 19.
Crackdown Continues
Meanwhile, the authorities continued to crack down on irregularities that disrupt market order. China’s top three coal producing regions – Shanxi, Inner Mongolia and Shaanxi – have launched campaigns to probe into illegal coal storage sites, said the NDRC.
The state planner also summoned Futures Daily on Wednesday night over its coverage of efforts to stabilise coal prices and supplies and said the publication faces punishment for inaccurate reporting.
The most-traded January contract of thermal coal fell 1.5% during night session on Wednesday and was traded range-bound in Thursday early trade.
China’s production increase comes as Vietnam, Poland, Chile and several other countries pledge to phase out coal-fuelled power generation and stop building new plants at the COP26 climate summit in Glasgow.
Greenhouse gas emissions from burning coal are the single biggest contributor to climate change, particularly in Asia.
“Without progress in policy, Asia’s future growth still looks too reliant on fossil fuels, particularly coal, ” Gavin Thompson, vice chairman for Asia Pacific energy at commodities consultancy Wood Mackenzie, said.
“Over 70% of the region’s emission footprint is coal-based and with electrification the cornerstone of the energy transition, Asia’s rising power demand risks prolonging dependence on coal for the next decade at least.”
• Reuters with additional editing by Kevin Hamlin
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