China's monthly power coal price index fell for the first time since last May to 528.54 yuan/t in January, said the country's top economic planner on February 13.
The power coal price index, which assesses domestic 5,000 Kcal/kg NAR coal on a delivered basis to power plants, was 1.2% lower than the month prior but up 61.8% over the previous year.
Regional sub-indices showed that power coal prices in Guangxi, Jiangxi and Hunan were relatively high, at 740.85 yuan/t, 703.05 yuan/t and 692.1 yuan/t, respectively.
Industrial factories started to suspend operation in the latter half of January to celebrate the Spring Festival, denting coal demand and weighing on prices of the fossil fuel.
The Fenwei CCI Thermal Index assessed domestic 5,500 Kcal/kg NAR coal traded at Qinhuangdao port at 603 yuan/t FOB with 17% VAT on January 25, down 14 yuan/t from end-December; the price of domestic 5,000 Kcal/kg NAR coal was assessed at 538 yuan/t, inclusive of VAT, down 12 yuan/t from end-December.
To avoid drastic price fluctuation, government authorities signed a memorandum on January 11, according to which certain measures would be taken to adjust market supply and demand to stabilize prices.
On January 22, leading coal miners, power firms and railway bureaus signed tripartite agreement on contract coal transport for 2017, which was expected to better push the implementation of annual supply contracts.
China will continue to press ahead with its coal de-capacity move, and the government has lowered total coal capacity cut target to 800 Mtpa from the previous 1 billion tonnes per annum over 2016-2020, according to an article by Premier Li Keqiang published on Bloomberg Businessweek at the end of January.
Chinese government will put its work focus on "securing supply and stabilizing prices" this year, by adopting bunches of policies like adjusting coal mine working days between 276 and 330.
As the country progresses in capacity cut move, coal prices will be less likely to fall to very low levels and may stay within a rational level. That could signal an end to the favorable profit China's power firms had enjoyed when coal prices were low. Actually, the top five power firms have turned into loss from profit since last September owing to price resurgence.
This year, Chinese coal miners could expect to earn money while power firms may suffer losses, industry insiders said.
(Writing by Jessie Jia Editing by Harry Huo)
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