China spot coal prices soar to near double government-set cap
Spot coal prices in China surged this week amid fears of a tightening global market, nearly doubling a government-set cap for long-term supply to power plants.
The price of physical thermal coal at mines in the hub of Yulin rose to as high as 1 400 yuan ($221) a ton this week, Chinese consultant Fenwei Energy Information Services Co. said on a Friday webinar. The National Development and Reform Commission last month announced medium- and long-term contracts should trade in a 570 to 770 yuan range, while pithead prices in Yulin’s Shaanxi province will be capped at 520 yuan starting May 1.
Spot prices are rising in part because of the government’s insistence that power plants sign term contracts for all their needs, which has left less supply available on the spot market for industrial users like ceramics, cement and chemical plants, Fenwei said. Mines are already producing near record levels of more than 12-million tons a day, leaving little room to ramp up, the consultancy said.
Meanwhile imports are likely to be suppressed with global prices at records as buyers scramble to replace Russian coal after the invasion of Ukraine, and miners in top exporter Indonesia bracing for the possibility of more disruptions to foreign shipments.
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