China’s energy crisis showed little sign of abating last week, despite authorities’ desperate attempts to add more coal supplies to the market and boost power generation.
Under intense pressure from generators and other ministerial officials, the country’s top coal mining safety regulator approved capacity expansion plans for 153 coal mines and pledged to release an extra 55 Mt of coal supplies in the fourth quarter, equivalent to 0.6 Mt per day.
Reflecting the seriousness of the situation, a coal mine that had halted operations following a major accident more than a year ago has been allowed to restart from 15 October.
November 2021 prices on the China Zhengzhou Commodity Exchange closed at $312.838/t on Friday, up by 41.4% week-on-week.
Supply scarcity continued to spread to all markets. Thermal coal stocks at South Africa’s Richards Bay Coal Terminal have dropped sharply to below 2.50 Mt, down by 20% on the month and below the key 3 Mt threshold many in the industry consider the minimum working level. ARA coal coal stocks were also down, to 4.26 Mt, close to their historical lows.
API2 Cal 2022 prices closed at $153.50/t on Friday, up by $19.62 week-on-week.
China coal prices increased again this Monday, showing the crisis is ongoing. API2 Cal 2022 prices could therefore continue to rise although profit taking by financial participants (as prices are trading in overbought territory) could contribute to limit gains.