Because the price of coal in China is soaring more and more
Coal contract prices in China are close to reaching the 2,000 yuan ($ 311) per ton mark. Here is data, announcements and comments from the experts
The prices of coal futures in China have risen to nearly 2,000 yuan per ton, or $ 311. It is a value that Bloomberg defines "previously unthinkable" and that is linked to the current energy crisis in the country: it is mainly due to a shortage of coal (the fossil fuel used to generate 70 percent of electricity) and is causing rationing of energy supplies to various Chinese regions or provinces.
THE TEMPERATURES DROP, THE DEMAND GOES UP
The situation is made worse by low temperatures in eastern China, which is increasing the demand for energy (coal, therefore) for heating. But stock levels are low, and fuel shortages are impacting industrial production: in the third quarter of 2021 , China's economy – the second largest in the world, after America's – grew by 4.9 percent. , slower than expected.
HOW IS THE PRICE OF COAL IN CHINA
Since the end of September, the prices of coal futures traded on the Zhengzhou Commodity Exchange have risen by more than a third. And according to analysts, they will continue to grow in the coming months, given the approach of the winter season.
COAL LIKE OIL
Energy reporter Javier Blas wrote on Twitter that coal futures in China have risen 110 percent since September 1; on the physical market, where delivery is immediate, coal trades at an even greater value.
Coal prices are going parabolic in China, with futures climbing 110% since Sep 1 to almost 2,000 yuan per tonne today (~ $ 300). Coal for prompt delivery in the physical market is trading much higher. To put it in context, Newcastle and Richards Bay coal trades ~ $ 230 per tonne pic.twitter.com/hrotNxlv1f
– Javier Blas (@JavierBlas) October 19, 2021
Blas also notes that China's thermal coal prices are approaching oil prices. Chinese coal futures , when measured in barrels of oil equivalent, are worth about $ 77: West Texas Intermediate crude is trading today at $ 82 a barrel, Brent at $ 85.
COAL PRODUCTION IN CHINA
According to official data from the National Statistics Institute, China produced 334.1 million tons of coal in September, 0.9 percent less on an annual basis. In August, production amounted to 335.2 million tons.
About ten days ago, the Chinese authorities ordered coal mining companies to increase production. Those in Inner Mongolia – one of China's most coal-producing regions – have asked companies to expand their production capacities by 100 million tons (nearly 10 percent more than last year's levels). In Shanxi province, the local government has established that the 98 active mines will have to increase output by 55.3 million tons per year.
Previously, the banking regulator had required domestic financial institutions to prioritize funding for coal mines.
Chinese Prime Minister Li Keqiang also announced a series of measures to support coal output, including accelerating the construction of new mines and tax deferrals for coal-fired power plants.
Growth in production will not make more coal available immediately, but it will take time to translate into reality. China produced 3.9 billion tons of coal last year and most likely will produce more in 2021, although President Xi Jinping said he wanted to bring the country to peak greenhouse gas emissions before 2030. and to achieve carbon neutrality by 2060.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/cina-carbone-prezzo-2000-yuan-tonnellata/ on Tue, 19 Oct 2021 08:56:09 +0000.