Thermal coal prices keep the strong momentum in China's spot market, backed by high consumption in the coal-fired power sector.
On January 9, Fenwei CCI spot index for the 5,500 Kcal/kg NAR thermal coal was assessed at 725 yuan/t FOB, rising for 50 consecutive days from 670 yuan/t FOB on November 21.
Coal-fired power plants had to generate more power during this winter heating season. Households had to keep warm by consuming much electricity in southern China and some northern regions where coal-to-gas facilities haven't yet to be completed, especially after blizzards hit most northern provinces and rainfalls hit the south in the first week of January.
Over January 1-10, combined daily coal consumption averaged 737,000 tonnes at the six major coastal utilities, a little lower than 753,000 tonnes over December 21-31 but 66,000 tonnes more than a month ago.
Combined coal stocks of the six utilities, 10.57 million tonnes as of January 10, can only support consumption of less than 15 days. In fact, their stocks have stayed below levels for 15 days of use after December 15-16 days of use.
Besides the large consumption, tight supply from domestic regions was also a reason behind low coal stocks at power plants.
A trader at Qinhuangdao port said domestic coal supply remained tight at northern ports. "The newly-bought rail wagons to run in Daqin line are still not in full position now," he noted. "Truck transport was heavily blocked by wide-spread snowfalls in the first days of the month."
Over the first ten days of January, daily coal rail inflow and outflow averaged 599,800 and 566,300 tonnes, far lower than 612,100 and 619,000 tonnes a month ago.
Some miners in Inner Mongolia complained large amounts of coal were piled up at warehouse as no trucks came recently. "Snow is quickly removed on freeways, but for provincial highways and small road to mines, you can only pin your hope on the sun," one said.
For import thermal coal, insiders believed the recent lift of coal import restrictions at ports may have little impact on seaborne import market in the month. "But in February, the impact will emerge along with large coal inflows from overseas markets and low consumption in plants and factories," one said.
The Chinese New Year holiday lasts from February 15-21, the most important holiday for people within Chinese culture.
(Writing by Alex Guo Editing by Tammy Yang)
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