Chinese state planer calls for vigorous coal supply for utilities

2017-08-11 08:35:00 Policy

Chinese state planner the National Development and Reform Commission (NDRC) said it will take vigorous measures to secure coal supply for power plants, as rallying coal prices and tight supply have aroused anxieties over household heating in this winter.

Many provinces in northern China were facing difficulties in getting enough coal for cold winter this year, impacted mainly by limited rail transport capacity and a lack of coal supply.

"We are booking the power-generating material lately, yet it is basically unavailable," said a Liaoning-based power company source.

Thermal coal prices have been spiking since this year, which weighed on power producers for surged cost. Data showed that the average price of domestic 5,500 Kcal/kg NAR coal was 611 yuan/t FOB over January-June, climbing 140 yuan/t or 29.72% from the average level in 2016.

"Railway transport capacity is also so limited, hampering coal supply for electricity producers," said the source.

"Though we talked about the issue with officials of China Railway Corporation, they attributed tight transport to a raft of food deliveries and some other cargoes," he added.

Recalling the similar situation that happened in last heating season, he said coal supply tightness in frigid northeastern China in early this year, including Heilongjiang and Liaoning provinces, did not ease until local governments took regulating measures to guarantee supply.

Northeastern China and Inner Mongolia, main coal production bases in China, were trapped in coal supply conundrum.

Lignite produced in Inner Mongolia was not allowed to flow into Heilongjiang in 2016, because the material, deemed as polluting low-quality coal, was not allowed to be transported 600 km away from the production area, he pointed out.

"However, miners fail to carry out this rule as ensuring coal supply has been the first priority amid severe shortage," he added.

It usually takes long time to ship coal to many distant inland power plants like Liaoning, so it happens when the material is sold out before arriving at these utilities, the source noted.

Besides, the central government's efforts in slashing outdated coal capacity since last year greatly challenged domestic power coal supply, though the campaign did enhance the concentration of coal industry.

"We could only turn to the government after failing to get coal to burn, and government authorities reinstated production of one coal mine that was ordered to close," said a power plant in North China.

Data showed that China had or planned to shut 1,688 coal mines in 2016, with combined capacity at 251.14 million tonnes per annum (Mtpa).

Around 111 Mtpa of coal capacity had been eliminated in the first half of 2017, accounting for 74% of the year's target, showed the NDRC data.

Lots of factors should be responsible for sporadic supply shortfall and price fluctuations, said Yan Pengcheng, spokesman with the NDRC.

Rapid output growth of main coal-consuming sectors stimulated by economy rebound and insufficient hydropower generation are main reasons, he added.

Outputs of thermal power and crude steel increased 6.4% and 4.4% respectively year on year over January-May in 2017, pushing coal burns for power generation up by more than 60 million tonnes or 10.3% on the year.

"We are taking measures to alleviate coal supply shortage and will boost inbound shipments to transfer ports and regions and power enterprises that lacked coal," said Yan.

(Writing by Tammy Yang   Editing by Jessie Jia)
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