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Chinese thermal coal prices soar

Published by , Editorial Assistant
World Coal,

According to Reuters, China's thermal coal prices rose to the highest level since mid-November, due to tightening supply, which has eased concerns that prices will fall following policy makers delay in introducing radical production controls.

At the port of Qinhuangdao, benchmark thermal coal prices rose 2.5% this month to US$87.6 on 10 March,which is close to the US$90/t record reached in November. On average, prices in March were at their highest levels in at least three years.

The upward momentum in coal prices was due in part to a ban on explosives used by coal producers and expectations that Beijing will impose strict limits to cut overcapacity this year.

According to analysts, China's state planning agency called the first meeting with producers on Monday to discuss coal supply in addition to talks on cutting capacity cut plans.

Thus far, the informal ban on explosives has affected both large scale and small producers in top producing region Inner Mongolia, as well as Shanxi and Sha'anxi provinces. The ban has forced utilities to buy more expensive coal on the spot market as the supply of cheaper coal under long-term dwindled.

The contract price is at a 60 yuan discount to the spot market, according to traders.

An executive with Shandong Energy Group said the fourth largest producers by revenue can only meet 70% of the volumes required by their long-term contract clients. One of China's largest coal producers, Shenhua Group halted sales of spot cargo, at some north ports, including Qinhuangdao.

Prices are predicted to fall when the ban expries at the end of this week.

Sources: Reuters 

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