China sees some thermal utilities in fund crunch amid soaring coal prices Viewpoint,  Company,  Price,  Thermal Power 2018-01-31 13:53:00

Some coal-fired power plants in China have been suffering capital strain, mainly due to surging thermal coal prices, despite a series of measures the government took to quell the rally.


On January 29, the most-active thermal coal futures on Zhengzhou Commodity Exchange for May delivery stood highest at 679.8 yuan/t, hitting a new high since its debut in 2013. The futures price has been going upward from 602 yuan/t at the beginning of the year, up 13% within less a month.


On the same day, coal stocks continued to advance in A-shares – Shanxi Lu'an Environmental Energy Development (SHA: 601699) rose 6.81%, Datong Coal Industry (SHA: 601001) up 6.77% and Yanzhou Coal (SHA: 600188) up 6.03% as of market closure in the afternoon. 

On the spot market, thermal coal prices have been on a continuous rise recently. On January 29, offer price for 5,500 Kcal/kg NAR coal approached 760 yuan/t, FOB Qinhuangdao port with VAT, the highest since June 2012. 

High coal prices, which jumped 25% from the year-ago level, make it hard for utilities to break even now, with many of them in lack of capital and would have suffered losses last year.


In an urgent letter submitted to China's National Development and Reform Commission on January 22, four of China's five major power generators reported many of their branch coal-fired plants were losing money, and some were struggling without loans from banks any longer.


Central China's Hunan province recently said all-in cost of key thermal power firms averaged over 1,120 yuan/t on standard coal basis, a record high in the history, leaving few profit margins for them.


These are never individual cases. Market insiders thought losing money in 2017 is in all likelihood for most listed thermal power firms.


Changyuan Electrict Power Co., Ltd., a Shenzhen-listed arm of China Energy Investment Corp, said late January 26 it may suffer a loss of 90-150 million yuan last year, compared with 399 million yuan of net profit in 2016.


Jilin Electric Power Co., Ltd. said its fuel cost increased 526 million yuan and it book a loss of 335-355 million yuan in 2017.


Huadian Energy Co., Ltd., a Shanghai B-share listed subsidiary of China Huadian Corp., expected to loss 950-1,050 million yuan last year, as its costs surged by 110 million yuan from a year ago because of coal price rally.


Beside high coal prices, another tricky problem is coal stocks that have fallen below the critical levels at many power plants.


The four power generators said in the letter that coal stocks now are below the critical level of seven days of use at some power plants in northeastern region, Beijing-Tianjin-Tangshan region, Shandong, Anhui, Gansu, Guizhou, Xinjiang, Hubei, Hunan, Zhejiang and part of southern coastal regions.


Especially in northeastern region, Hubei, Shandong, Anhui, Gansu and Guizhou, where some power plants only had only 2-3 days of coal stocks.


Data from showed combined coal stocks totaled 8.88 million tonnes at China's six major coastal power groups as of January 30, down 10.8% from a week ago and 15.17% from a month ago.


With recent snowfalls blanking most parts in central and eastern China over January 24-28, the six's daily coal consumption soared to 812,000 tonnes on January 30, reducing stocks to below 11 days of use on average. 

The four generators warned if the stocks can't resume to normal soon, there will be tough issues like insufficient heating and electricity during the coming Lunar New Year and it will be difficult to cope with extreme weather like blizzards and large-scale freezing temperature.


In the days up to February 5, cold front will grow stronger towards the south while temperature will fall further in the north, according to the National Meteorological Station. "Temperature will pick up slowly thereafter, but it's still far lower than previous years."


To cope with the issues, the four generators gave their solutions. Besides plea of coal price stabilization, they requested the NDRC to strengthen coal production and transport.


They seemed to have received the answers.


Shanxi, as well as Guizhou and others, promised to keep coal mines running during the Lunar New Year holiday. The railway departments prioritized coal delivery ahead of other freight cargoes during the busiest passenger transport season when millions of migrant workers are coming back home for the holiday. 

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

Share this article
Connect with us

Editors Recommendations

1 China Coal Daily Track (Aug 15) 2018-08-15

Thermal coal Domestic market Production area Mixed price trends were seen at major production areas in Shaanxi province. Some miners at Fugu county raised coal prices as smooth sales wit

2 China's Jiangsu to forge two steel industry clusters for efficiency 2018-08-15

Eastern China's Jiangsu province plans to lay out two steel industry clusters along the coast in next few years through methods of shutdown and relocation, the provincial government said in a document

3 China's Jul coal import surges 49%, backed by sizzling weather or de-capacity reform? 2018-08-15

China's national statistics body released energy supply data for July on August 14, showing China's coal imports skyrocketed 49.1% on the year to 29.01 million tonnes in the month, reaching the highes

4 China's import coal market still sees sparse deals on lukewarm demand 2018-08-15

Sparse deals were reached in China's import thermal coal market, as domestic coal-fired power plants still showed lukewarm demand for the fuel and unfavorable factors like import quota restriction and

5 China spot thermal coal price further advances, beating traders' expectations 2018-08-15

China's domestic thermal coal price further climbs up after a short pause, beating the conservative expectations most traders held at the beginning of this round of rise in early August.

6 Tight trucking capacity sending coal freight higher in Shanxi 2018-08-15

Truck freight for delivering coking coal within and out of Shanxi province in northern China edged up 10-50 yuan/t, as trucking capacity was constrained partly by environmental crackdown and partly by

7 China's QHD port posts ten consecutive days of coal stock decline 2018-08-15

Qinhuangdao port in North China's Bohai bay posted decline of thermal coal stocks for ten consecutive days, due mainly to faster growth of coal outflows than that of inflows. As of August

8 China accelerates natural gas production in Jul; import stays high 2018-08-15

China accelerated churning out natural gas in July and maintained high imports of the material, according to official data, a move to meet the burgeoning demand from domestic market amid a shift from

9 SW China coal-fired power plants step on edge of bankruptcy 2018-08-15

"We have two 600-MW coal-fired generators – one for the backup and the other running unsteadily. Only the summer and winter peak periods may the two have an opportunity to run at the same time. The co

10 China Coal Daily Track (Aug 14) 2018-08-14

Thermal coal Domestic market A 10 yuan/t increase was seen at some mines in northern Shanxi and Ordos, Inner Mongolia, driven by more inquiries from traders and lower stocks at min

Most Read Articles

1 China spot thermal coal market firms on utilities' active buying 2018-08-07

Spot thermal coal market showed signs of stabilizing at Bohai-rim ports in northern China, alongside utilities' active buying for the power generating fuel and strong sentiment among traders in uphold

2 China Jul coal imports hit multi-year high, surging 49.05% on yr 2018-08-08

China's coal imports reached 29 million tonnes in July, remaining a large growth by 49.05% from a year ago, data from the General Administration of Customs showed on August 8, reaching the highest sin

3 Uncertainty rises towards Chinese coal market after price rally for days 2018-08-10

Chinese domestic thermal coal price headed up again after a brief fall in early August, leaving a wide uncertainty on market trend in the near future. The latest CCI index for 5,500 Kcal/

4 QHD coal stocks slide for 6 days; prices lack continued momentum 2018-08-09

Coal stocks at China's benchmark Qinhuangdao port have been on the drop for six consecutive days, down to 6.42 million tonnes on August 9, showed data from That was a 9.8% ret

5 Indonesia's Aug HBA thermal coal price up 3.04% MoM to $107.83/t 2018-08-06

Indonesia's Ministry of Energy and Mineral Resources set its August thermal coal reference price, also known as Harga Batubara Acuan or HBA, at $107.83/t, hitting the highest since March 2012, up 28.4

6 Import coal price continues edging down, little supported by domestic upturn 2018-08-08

China's import thermal coal price is still edging down and gets little support from the recent pickup in the domestic market. Offer-bid spread for Indonesian thermal coal remained at $2/t

7 Chinese traders see losses easing on further upward strength of thermal coal 2018-08-10

Chinese thermal coal traders saw their losses, caused by previous sharp slumps of prices,easing gradually amid the recent upward strength at northern transfer ports. The mainstream

8 China will tighten grips on coke production in major production regions 2018-08-09

China plans to crank up capacity cutbacks in major coke production regions, said the environmental ministry in a draft plan recently, in response to the country's pledge to win the "Blue Sky Protectio

9 Customs clearance delay beefs up China Jul coal imports 2018-08-09

China's coal imports totaled 29 million tonnes in July, soaring 49.05% from a year ago, the customs data showed on August 8, reaching the highest since January 2014. Traders said the main reason behin

10 Caofeidian will play bigger role in coal transfer after Qinhuangdao quits coal business 2018-08-08

Caofeidian port will take over a heavy responsibility from Qinhuangdao port – the current largest coal port in China, which is said to quit coal transfer business gradually in three to five years.