China’s NDRC calls for steady coal supply and delivery
Beijing notes that the development of China’s advanced coal capacity will be accelerated and at the same time, it requests domestic railway network to coordinate for a smooth coal transportation, according to the NDRC release on June 25.
Rising temperatures across China in summer and higher electricity consumption from the increased prevalence of air conditioners have meant that energy supplies in some areas will tighten during the peak hours of power consumption, particularly if high temperatures are prevailing over a wide area, according to the release.
In May, China’s total social power consumption grew 2.3% on year to 566.5 billion kWh, among which the country’s household power consumption increased at a much faster rate of 6.8% on year to 68.3 billion kWh, according to the data from China’s National Energy Administration Monday.
In contrast, over January-May, China's raw coal output grew 0.9% on year to 1.4 billion tonnes, among which the dominant majority was thermal coal.
Against this background, the NDRC requires all of China's coal mining regions to ensure stable coal supply on the condition that mining safety is secured. Taking the lead responsibility to increase coal output and supply will be the country’s top mining provinces and regions including North China’s Shanxi and Inner Mongolia and Northwest China’s Shaanxi.
As for coal transportation, operators of railways, ports and inland and coastal shipping businesses are required by NDRC to prioritize their transportation or handling capacity to for the efficient coal delivery, according to the notification.
The notice did not specify the type of coal, NDRC’s request that coal production and supply be increased is more thermal coal-focused, according to market sources, which means the influence on coking coal mining and transportation could be limited.
“Coal is the major fuel for China’s energy supply, and during each summer and winter in recent years, the authorities have regularly called for stable coal supplies and have reiterated the need to develop advanced coal capacity,” said a Shanghai-based analyst.
Unlike for thermal coal, further policy directives may be unnecessary to boost output of coking coal, he explained. Thanks to the high margins they’re winning at the moment, enterprises mining coking coal will normally work with high operating rate to earn as much as they can, he noted, adding that the supply tightness of coking coal (and of premium-quality coking coal, in particular) is mainly because of the sustained high demand for it from industries such as coke production and steelmaking, and may remain so for a long time.
“Some railway operators offer discounts on freight charges for transporting thermal coal while we hear no such a policy being applied on major coking coal deliveries,” the second analyst in Shanghai noted.
Written by Sean Xie, xiepy@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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