Fuel Shortage Triggers Jump In Coal Prices

- Dec 20, 2017-


China's thermal coal prices jumped recently as natural gas shortages across the north spurred an unexpected resurgence in demand for coal-fired power.

Coal futures jumped to 689.8 yuan ($104) per metric ton on Dec 11, topping a previous all-time high of 688.8 yuan set the previous week, Reuters reported.

China Coal Price Index, the first index of its kind in the country, rose by 0.7 percentage points to 156.6 on Dec 8. The price of 5,000 kilocalorie coal and 5,500 kilocalorie coal in the northern ports reached 591 yuan and 612 yuan per ton respectively on Dec 8, up by 5 yuan and 2 yuan respectively from a week earlier.

The increase comes after the country was forced to put the brakes on its ambitious push to convert millions of households to gas or electric heating. Because of a gas shortage, people have been told they can return to coal heating if needed.

On Dec 7, the Beijing municipal government ordered an immediate restart of coal-fueled generators to ease the shortage of liquefied natural gas in northern China.

The city was told by the National Development and Reform Commission to immediately resume the backup coal-fired power plant run by China Huaneng Group.

The Huaneng coal-fired power plant, with installed capacity of 845 megawatts, was shut in March in a bid to reduce harmful emissions in the city.

On Dec 4, the Ministry of Environmental Protection told northern regions to allow coal burning in places that have not converted to gas or electric heating in order to "ensure a warm winter" for the public.

Four central government branches, including the National Development and Reform Commission and the Ministry of Environmental Protection, would send inspection teams to 11 provinces across northern China to ensure households have heating during winter, Xinhua reported.

"Although the transition from coal to clean and renewable energy is an irreversible trend, it will proceed in a gradual manner in the world largest consumer of the fuel," said Lin Boqiang, director of the Energy Economics Research Center at Xiamen University.

China holds one-third of the world's coal reserves; in 2016, the fuel accounted for around 62 percent of the nation's basic energy needs.

Wu Lixin, deputy director of the strategic planning research department at the China Coal Research Institute, said the country has made great efforts to reduce emissions from coal-fired power plants. Currently, the smoke and pollutant emission of half of the country's coal-fired power plants are similar to those of gas-fired power plants

"Unless the storage technology of renewable energy makes a significant breakthrough, coal will still remain the most important energy source in China, making up around 50 percent of the country's total energy consumption in 2030," she said.

However, coal prices will "basically be stable in the long term as the situation of overcapacity and oversupply in the sector remains unchanged", said Jiang Shimin, vice-president of China National Coal Association.

Previous:Big Industrial Firms See Strong Profit Growth Next:Chinese Startup Firm Aims To Train Ugandan Youths For Jobs In Oil Sector