Coal supply tightness could hardly ease in short term amid safety checks

sxcoal.com Viewpoint,  Thermal Coal 2020-11-19 08:54:07

The supply tightness in China's domestic thermal coal market may continue in the near term despite the central government's push to boost production.


China has kicked off an across-the-board safety inspection targeting all coal mines in the wake of several fatal accidents recently, which last through to the end of next year. Data showed there have been more than 100 coal mining accidents so far this year.


The safety campaign focuses on coal mining infrastructure, risk prevention management for major disasters, and capabilities for emergency response and recuse, according to a statement issued by the State Council on November 17.


Unlike Australia and Indonesia, where there are a lot of opencast pits, most coal mines in China needs to work hundreds meters or more than 1 kilometer under the ground, which brings high safety hazards and adds mining costs. Yet human factor is nonetheless a major culprit as well.


Overproduction, used to be half-hidden in the industry, made a big contribution to the overall supply, but this year, the coal mine safety administration has strengthened the crackdown on this wrongdoing, partly leading to a supply shortage across the country.


The latest safety campaign made it clear that inspectors will crack down on miners operating beyond their approved capacity.


In fact, local government has already taken measures since several fatal accidents happened in the past two months. The latest official data showed China produced 336.63 million tonnes of coal in October, up 1.4% from a year ago, but it declined by 0.9% against September.


Under mounting safety pressure, coal production is less likely to increase much in the near term. This could further worsen the supply situation at northern ports, where coal stocks are still at a low level despite efforts to push up transports by railway departments.


Therefore, the domestic thermal coal prices could be very likely to remain above 600 yuan/t FOB for 5,500 Kcal/kg NAR coal for quite a long time to come.


(Writing by Alex Guo  Editing by Tammy Yang)
For any questions, please contact us by inquiry@fwenergy.com or +86-351-7219322.

Share this article
Connect with us

Editors Recommendations

1 US coal output slides 5.2% WoW in the 4th week of Nov 2020-12-04

US coal production was estimated at 10.58 million short tons (9.59 million tonnes) over the week ending November 28, falling 5.2% from the previous week and down 10.7% from the same period last year,

2 China's thermal coal indexes halt updating amid market overheating 2020-12-04

Several coal price institutions announced to halt updating their daily indexes of spot thermal coal as the market has been rising too wildly this week. On December 3, CCI Index Team of sx

3 Vale to build 7.66-GW solar power plant 2020-12-04

The world's largest iron ore mining group Vale plans to build a 7.66 GW solar power plant in southeastern Brazil's Minas Gerais state, said the company this week. Vale will funnel $500 mi

4 Indonesian thermal coal keeps strength on strong fundamentals 2020-12-03

Indonesian thermal coal prices drifted higher on December 3 in the Chinese seaborne import market with sources citing solid supply-demand fundamentals. Offer prices of Indonesian Supramax

5 China's thermal coal buying lulls on wait-and-see sentiment 2020-12-03

Buying interest lulled in Chinese spot thermal coal market as wait-and-see sentiment grew thicker after prices jumped to a 20-month high since mid-March 2019. The procurement pause is not

6 China's seaborne met coal sees weakening price edge after rises 2020-12-03

China's seaborne metallurgical coal, mainly supplied by Canada and US, saw price advantage narrowing after a flurry of hikes supported by sizzling buying appetite from end users and domestic shortage.

7 China Nov coke market: prices rise for two rounds amid tight supply 2020-12-03

Chinese metallurgical coke market extended the growth with another two rounds of rise in November, adding up to seven rounds in a row since early August, due to a combination of supply tightness and s

8 Coal inventory stays low at Yangtze River ports; outlook bullish 2020-12-03

Thermal coal stockpiles continued drifting lower at ports along the Yangtze River, as northern ports haven long failed to build up inventory amid short supply at main production provinces and this kep

9 Indonesian thermal coal prices in rising streak on solid demand 2020-12-02

Spot prices of Indonesian thermal coal continued to go upward in the Chinese seaborne import market as buyers kept the high buying enthusiasm to expand their inventories. Fenwei CCI 3800

10 China sees massive coking coal price hikes on shortfall 2020-12-02

China registered broad price hikes of coking coal in main production provinces in early December, indicating the lingering firm strength in the short run following rounds of upward adjustments in Nove

Most Read Articles

1 China begins to speed up customs clearing for import coal stockpiles at ports 2020-12-01

China is accelerating the clearing progress for seaborne import coal stockpiled at ports after a meeting held by the General Administration of Customs (GAC) on November 30, said sources familiar with

2 China's premium coking coal jumps to 8-mth-plus high 2020-11-30

China's low-sulfur primary coking coal, a premium material for coke making, ticked up to an eight-month-plus high, amid acute supply crunch caused by rising safety pressure and end users' strong resto

3 Chinese suppliers lift spot thermal coal prices rapidly amid bullish futures 2020-12-02

Chinese portside suppliers have been rapidly lifting offers for spot thermal coal in recent days, inspired by outlook of lingering supply shortage and jumping futures prices. Main January

4 China's coal market to stay in a tight balance in 2021, CNCA 2020-12-02

Chinese coal market is expected to stay in a tight balance in 2021, with stronger demand driven by faster recovery of economic growth, said Zhang Hong, spokesman with China National Coal Association (

5 Australian thermal coal remains inaccessible to China 2020-11-30

Australian thermal coal was still unable to get access to China with several vessels at anchorage off coastal ports awaiting clearance, but it has found some supports somewhere else. Ther

6 China's spot thermal coal extends resilience on short supply 2020-11-30

Chinese spot thermal coal market extended resilient run at the beginning of this week, as coal supply remained capped by safety inspections and limited sales quotas, while end users maintained active

7 Chinese met coke prices continue rising on tight supply 2020-11-30

A group of metallurgical coke producers in northern and eastern China proposed to raise coke prices by 50 yuan/t at the start of this week amid tight supply, marking the eighth round of uptick, which

8 Japan Oct coking coal imports slightly up; cargoes from Australia further increase 2020-11-30

Japan's coking coal imports inched up in October and hit the highest since May this year, official data showed. The country took 4.95 million tonnes of the steel-making coal last month, r

9 Indonesian thermal coal prices in rising streak on solid demand 2020-12-02

Spot prices of Indonesian thermal coal continued to go upward in the Chinese seaborne import market as buyers kept the high buying enthusiasm to expand their inventories. Fenwei CCI 3800

10 Weekly China thermal coal market analysis and forecast 2020-11-30

China's domestic thermal coal prices jumped to a new high since early March 2019, fueled by demand from power plants in the southern and eastern coastal regions where a cold snap lowered temperatures