Datong Coal Mine Group, one leading thermal coal producer in northern Shanxi, and privately-owned Inner Mongolia Yitai Coal Group have also lowered prices of power generation coal by 15 yuan/t, effective January 11, joining the latest move to stabilize the red-hot spot coal market.
Announcing the price cut, Yitai Coal said it will work all-out to ensure supply to power plants and maintain stability of the coal market by actively implementing its social responsibility as a large-scale private coal enterprise.
"The pressure to ensure supply has increased recently, following the rapid growth in coal prices at production areas and northern ports," Yitai Coal said in a statement on January 11.
Datong Coal Mine said it would cut spot coal price by 15 yuan/t, while keeping long-term contract prices steady, showed a document dated January 10.
"Datong Coal Mine will fully act its model role as state-owned large coal enterprise, boosting coal supply and maintaining the market stable," it said.
So far, all the seven state-owned major coal miners in Shanxi province have adjusted down their thermal coal prices by 15-20 yuan/t, while vowing to ensure supply and stabilize the market.
Besides Datong Coal Mine, the rest six Shanxi-based state-owned miner are Shanxi Lu'an Mining Industry Group, which cut prices by 15-20 yuan/t, Yangquan Coal Industry Group, Shanxi Coking Coal Group, Shanxi Coal Import & Export Group, Shanxi Jincheng Anthracite Mining Group, Shanxi Jinneng Group, which all reduced prices by 15 yuan/t.
Spot prices have surged recently as there are not enough rail wagons available to send coal cargoes from northern production areas. Coal demand from power plants has been strong as they burn more coal to meet power and heating demand.
By January 11, the Fenwei CCI Thermal index showed that the FOB price of domestic 5,500 Kcal/kg NAR coal rose to 736 yuan/t, up 21 yuan/t from a week ago and 65 yuan/t higher than the recent low of 671 yuan/t on November 17.
Most rail wagons are allocated to major coal miners, primarily for long-term supply contracts, so there are not many wagons left for spot cargoes, traders said.
To maintain supply, the newly-merged China Energy Investment Group on January 11 signed three-year coal supply contracts with six large power generators – Datang Group, State Develop Investment Corp., Zhejiang Energy, Guangdong Yudean, Jiangsu Guoxin and Shanghai Shenneng.
(Writing by Alex Guo Editing by Harry Huo)
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