Coal prices rise to record in China as floods keep supplies tight

Futures gain 9% to intra-day record of $254.3/ton

A dramatic surge in coal prices in China is beginning to cool as top production hubs recover from the impact of floods, signalling a reprieve in the nation’s energy crisis.
 
Most coal mines shuttered as a result of heavy rainfall in northern China’s Shanxi province have now resumed operations, while output is improving in the neighbouring Shaanxi hub. Daily production in Ordos, Inner Mongolia jumped to the highest rate this year in recent days, according to analysts at CCI.
 
Coal futures on the Zhengzhou Commodity Exchange pared gains Wednesday after earlier rising about 9 per cent to a new intra-day record of 1,640 yuan ($254.30) a ton. The most-active contract, which jumped almost 20 per cent in the previous two sessions, traded 5 per cent higher at the midday trading break.
 
China’s coal shortage “may ease during October but the country still needs more supplies for December and January when the weather could be the coldest,” Bloomberg Intelligence analyst Michelle Leung said in a Tuesday note. Local mines have pledged to lift output and imports from suppliers including Indonesia will also likely rise, she said.
 
The squeeze on coal supply, along with high prices of the commodity and alternative fuels like natural gas, has prompted an energy crisis that’s seen power cuts at factories and industrial plants in most of the country. China mines and burns more than half the world’s supply, and the fuel accounts for more than 60 per cent of the country’s electricity generation.
 
Even with production resuming from mines, power demand is expected to grow as China enters its winter heating season. Energy-intensive industries could continue to face a slowdown through the rest of the year, according to UBS Group.   

September coal imports rise 76%

China’s coal imports in September rose to their highest this year as power plants scrambled for fuel to boost electricity generation to ease a power crunch. China brought in 32.88 million tonnes of coal last month, up 76 per cent from a year earlier. (Reuters)

Exports up 20% despite crisis

China’s export growth accelerated in September, defying expectations of a slowdown amid a nationwide power crunch. Exports grew 28.1 per cent in dollar terms in September from a year earlier to reach a new monthly record high of $305.7 billion, data showed. (Bloomberg)

Japan power prices hit 9-month highs

Electricity prices in Japan have risen to nine-month highs this week as gains in global prices of oil, liquefied natural gas and coal are starting to feed through to the country's $150-billion power market. For Japan, higher oil, gas & coal prices are bringing back inflation. (Reuters)

‘World failing to invest in energy’

The world is failing to invest in energy on the scale needed to escape catastrophic climate change and avoid sharp increases in fossil fuel prices, the International Energy Agency warned. “There is a looming risk of more turbulence for global energy markets,” it said.  (Bloomberg)