BEIJING, March 14 China's thermal coal prices
have jumped to their highest in years on Tuesday, amid fresh
concerns about tighter supplies and robust demand even as winter
draws to an end and a government meeting renewed speculation
that new output cuts may happen.
The rally has defied consensus among analysts and traders
that prices would crumble under pressure from new supply as
producers in the world's top consumer churn out more of the
Physical fuel prices in Qinhuangdao, the nation's main coal
port, SH-QHA-TRMCOAL jumped 3.3 percent from Friday to Monday,
the biggest one-day gain since September, to 625 yuan per tonne,
its highest since January 2014.
The most-active coal futures for May delivery on
the Zhengzhou Commodity Exchange rallied over 3 percent to 619
yuan per tonne, their highest since the contract launched in May
The surge follows a meeting of state planner the National
Development and Reform Commission (NDRC) with regional
government officials on Monday to discuss coal output cuts to
continue a policy of removing excess capacity, said four sources
with knowledge of the meeting.
The meeting stirred speculation that the government might
introduce new output cuts even after it indicated last week it
would avoid radical measures after the market disruptions last
The content of the meeting was not made public, but the
sources said the government reinforced its message that
provinces must cut overcapacity, ensure mine safety and maintain
supplies to utilities.
The NDRC did not respond to requests for comment.
"The market remains bullish on dropping port supply and
decreasing stocks at utilities," said Wang Fei, an analyst at
"The purported meeting of the NDRC just fuelled more panic
from utilities, who are in a rush to buy more as prices go up
further. There are also speculation that coal producers try to
boost prices by cutting port supply."
Other international prices also reacted on Monday.
Coal from Australia's Newcastle port, a
benchmark for Asia, jumped 9 percent to $78.70 per tonne on
Monday, but are still well off November levels above $100.
Adding to the perception of tighter supplies, China's
National Statistics Bureau reported coal output dropped in the
first two months of 2017, while power output, mainly fuelled by
coal, jumped 6.5 percent.
Inventories at Qinhuangdao stand at 4.6 million tonnes, down
from 7.33 million at the start of the year, according to Sublime
Stocks at the six largest utilities have fallen by 1.6
million tonnes to 10.20 million from a month ago, equivalent to
15.5 days of use, according to Changjiang Securities.
(Reporting by Meng Meng and Josephine Mason; Editing by