China National Coal Association is going to convene a meeting to discuss measures to stabilize the market with miners on February 21, the Shanghai Securities News reported.
The meeting will study coal market trend in 2017 and explore measures to ensure stable supply and industry development.
Insiders said the association may make use of the meeting to convey the government's hope to continue the de-capacity move to maintain coal prices within rational levels. China's coal prices may reenter the downward channel when the off season comes, so it seems necessary for the government to take measures to help stabilize the market.
Leading miners including Shenhua Group and China National Coal Group are backing renewed cuts to 276 working days from 330, but details on the implementation still need to be worked out by the government.
Sources said China may reorder mines to limit the number of days they operate each year to 276 from 330 from mid-March to end-August. If implemented, there could be some 150 Mtpa of coal production capacity curbed during this period.
China's advanced coal mines may still be allowed to continue operating 330 days.
The output cuts -- reducing annual operating days from 330 to 276 -- were introduced early 2016 as part of China's effort to cut inefficient surplus capacity.
But the limits were abandoned in November last year after a sharp drop in output triggered a rally in prices ahead of the peak winter heating season.
Recently prices of thermal coal edged up slightly at northern China ports, as supply started to get tight amid active demand and lower-than-expected growth in production at coal mines. On February 20, the Fenwei CCI Thermal Index assessed domestic 5,500 Kcal/kg NAR coal traded at Qinhuangdao port at 598 yuan/t FOB with 17% VAT, up 8 yuan/t week on week.
But the uptrend may be short-lived, as the demand is set to shrink with the end of heating season in mid-March while output is expected to return to normal level after the coming two sessions.
China aims to cut 50 Mtpa coal production capacity this year through closure of 500 mines, said the National Energy Administration.
(Writing by Jessie Jia Editing by Harry Huo)
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