China's utilities warn of power coal shortages amid tight rail capacity, rising prices Thermal Coal,  Thermal Power 2018-01-29 08:24:00

Four of China's top utilities have asked the nation's top planner to take measures to boost power coal supply, as some regions may face heating and electricity shortages due to tightening coal supplies ahead of the Spring Festival.

China's State Power Investment Corp, China Datang Corp, China Huaneng Group and China Huadian Corp requested the National Development and Reform Commission in a letter dated January 22 to boost supplies of coal and tame a wild price rally.

"If the coal inventories don't rise to a reasonable level by Spring Festival, then it will be really difficult to deal with the drop in temperatures in some key regions and in the winter heating regions," the power generators said.

Some utilities in the northeast, Hubei and Shandong only have supplies enough for two to three days; some others in coastal provinces also witnessed coal stocks drop below alerting level of seven days, the letter said.

The NDRC met with the companies to discuss the issue on January 25 after receiving the letter, said a source familiar with the matter. No official statements were released regarding the meeting.

Blizzards and low water levels at Yangtze River have affected coal shipping to coastal consumption areas. Truck ban at Bohai-rim ports, part of the measures to combat air pollution, also squeezed transport capacity to haul coal from production areas.

Rail shipment, undoubtedly the main way of coal transport, has been facing a lack of rail wagons, and a 10% increase in rail freight rates by Harbin and Shenyang bureaus is improper and would further worsen tightness in the northeastern region, the letter said.

Logistics cost took up to 50% for trans-regional coal buys of power plants, and nearly all power plants in the northeast were in deficit, report said.

The top four power firms asked the NDRC to strengthen coordination of rail coal transport and prioritize delivery to regions and power plants with lower stocks and larger risk of coal shortage.

They also hoped NDRC could prevent local rail bureaus from raising freight rates to help power firms reduce cost.

They meanwhile expected import coal to continue playing a supplementary role in ensuring supply to coastal areas, sparing more domestic coal for northern areas plagued by tight supply.

Some utilities even had run out of cash in the wake of coal price rally, which has not been reversed downside even after a 15-20 yuan/t price cut by leading miners earlier this month. .

On January 26, the Fenwei CCI Thermal index showed domestic 5,000 Kcal/kg NAR coal was 681 yuan/t FOB with VAT, a surge of 91 yuan/t since the start of winter heating season in November.

Coal demand increased notably in China in the past month, following the drop of hydropower, increased consumption for heating and a lack of natural gas, while output was curbed by mines suspension for holiday and safety concerns.

Long shipping time also rendered import coal incapable of filling the gap in domestic market in a quick manner, not to mention supply constraints in major exporters.

Low stockpiles

Because of rising coal price and a lack of rail wagons, coal stocks at utilities have slumped, adding to risk of power shortage in the heating season.

Power load hit historic high in east and central regions, as heating demand ramped up amid snowstorms.

Authorities in eastern China's Jiangsu and central China's Hunan provinces have recently issued emergency documents, calling for more coal supply to ensure power supply stability in the peak season.

Major power firms in Hunan saw coal stocks plummet 27.5% from early this month and 16.7% from the same period last year to 2.35 million tonnes on January 25.

On the same day, power load in the province hit a new high of 27.84 GW. The power deficit could further expand, likely to touch 28.5 GW, compared with maximum supply capacity of 28 GW, the Hunan Economic and Information Commission said in an emergency notice on January 25.

With rapid growing power demand, power load reached as high as 91.91 GW in Jiangsu, up 20% from the year before, forcing some local governments to ration power at peak hours.

Power load reached 20.81 GW in Jiangxi, also in eastern China, on January 26, slightly beyond maximum supply capacity of 20.8 GW. To meet surging need, Jiangxi is actively buying electricity from other provinces and ordered all local generating units to run full capacity.

Maintaining stability is a main priority for the Chinese government, particularly ahead of and during Spring Festival. The week-long holiday, also known as Chinese or Lunar New Year, starts in mid-February this year, and is the longest and grandest holiday of the Chinese calendar for millions of people to head home for reunion.

(Writing by Jessie Jia  Editing by Harry Huo)
For any questions, please contact us by or +86-351-7219322.

Share this article
Connect with us

Editors Recommendations

1 Chinese traders concerned about policy risks on domestic thermal coal price 2018-05-21

Chinese traders are worried that the red-hot domestic thermal coal market may cool down abruptly as signs have shown, according to market sources based at northern ports. A trader in Hebe

2 Weekly China coal market news summary (May 14 – May 18) 2018-05-18

China's May coal imports may stay stable from Apr China's coal imports in May are expected to stay stable from the level recorded in April this year, as relevant authorities seemed to be less

3 Shanxi coking coal market steady, some grades firm up 2018-05-18

Coking coal market remained stable in China's coal-rich Shanxi province at present, while some coal types seemed to have firmed up in some regions of the province, said market sources. Co

4 Chinese traders wary of thermal coal imports on high prices 2018-05-18

Chinese traders became more wary of thermal coal purchase from overseas market, sources said, as wide spread between offers and bids impeded trades and raised more concerns about the import market.

5 Big adjustments looming in China coal transport layout 2018-05-18

China's coal transport structure is set to undergo great changes, especially for destinations in Beijing, Tianjin and Hebei in the north, as the country fights a battle against air pollution.

6 China's Hebei province to remove some solar subsidies next year 2018-05-18

China's northern Hebei province will phase out subsidies paid to some newly-built solar power plants from January next year, an official from the local pricing bureau told Reuters on May 17, part of

7 China's top 3 provinces contribute 67.5% of raw coal output in Jan-Apr 2018-05-17

Northern China's Inner Mongolia, Shanxi and Shaanxi produced 67.5% of the country's total raw coal in the first four months, showed data from the National Bureau of Statistics (NBS). On M

8 Chinese authorities may ease coal import limits to curb growing prices, sources 2018-05-17

Chinese authorities are studying over preferential policies for coal imports directly supplying to utilities, Economic Information Daily reported recently, citing sources that familiar with the inform

9 China's seaborne coal freight creeps up for two weeks on good demand 2018-05-17

Spurred by bullish sentiment over China's domestic thermal coal market, freight rates for coal shipment from northern ports to the southern and eastern China continued going up for two weeks.

10 China spot thermal coal market further ascends; worries linger on 2018-05-17

China's thermal coal market continued ascending at Bohai-rim ports following latest quick pick-ups, with offer prices jumping even higher on a lack of supply. Yet participants' worries over downside r

Most Read Articles

1 China Apr raw coal output up 4.1pct YoY, NBS 2018-05-15

China produced 293.3 million tonnes of raw coal in April, an increase of 4.1% year on year, showed data from the National Bureau of Statistics (NBS) on May 15. Over January-April, raw coa

2 China thermal coal market faces downward risks in short run 2018-05-16

Despite unexpected price rallies amid current slack season, China's thermal coal market at Bohai-rim ports is still facing downward risks in the short term, given little improvement of demand from uti

3 N Korea intends to export coal to China after a diplomatic breakthrough with US 2018-05-16

Some North Korean traders were offering low-price coal to Chinese traders and have stored up a number of cargoes at North Korean ports, expecting to deliver them over the border when a diplomatic brea

4 India's thermal coal imports rise over 15% in Q1 2018-05-14

India's thermal coal imports rose by more than 15% in the first three months of 2018, with Indonesia accounting for about three-fifths of total supplies, according to vessel arrival data from Dubai-ba

5 As temperatures soar, China coal traders bet on shortages 2018-05-17

China's thermal coal futures rose to a six-week high on May 16 as traders bet on a supply crunch as lower hydro power output and forecasts of a summer heat wave spurred expectations of rising demand f

6 China's May coal imports may stay stable from Apr 2018-05-15

China's coal imports in May are expected to stay stable from the level recorded in April this year, as relevant authorities seemed to be less strict in banning import coal following continuous price r

7 China's top 3 provinces contribute 67.5% of raw coal output in Jan-Apr 2018-05-17

Northern China's Inner Mongolia, Shanxi and Shaanxi produced 67.5% of the country's total raw coal in the first four months, showed data from the National Bureau of Statistics (NBS). On M

8 Intensified environmental crackdown may cause new capacity cuts in China coke industry 2018-05-14

A new round of capacity cutback may stage in China's coke-making industry, as increasingly stringent environmental checks force producers to limit output. The move was led by Xuzhou

9 Australian thermal coal offers remain high, weakening its price advantage 2018-05-14

Price advantage of Australian thermal coal weakened against Chinese domestic cargoes, after miners kept raising their offers in anticipation of bullish market in the short run. Chinese do

10 China Coal Daily Track (May 14) 2018-05-14

Thermal coal Domestic market Large mines in Shenmu and Fugu of Shaanxi reported marginal price rises of thermal coal amid low inventory and good sales, while some mines in Yuyang adjus