BEIJING (Reuters – China’s current record thermal coal prices jumped to record highs Wednesday, as the recent flooding in Shanxi, a major coal producer province, worsened a shortage. In addition to Beijing’s new attempts to liberalise power prices, this increased demand for power generators.

China is the largest consumer of coal in the world and has struggled with an increasing energy crisis due to record-high prices. A range of actions have been taken by the government in order to improve coal production as well as manage industrial plant electricity demands.

Some 200 miners were ordered by the Shanxi and Inner Mongolia governments to improve output. But, heavy rains have flooded at least 60 of these mines. A Shanxi official said Tuesday that four mines, with an annual combined output of 4.8million tonnes, were still closed.

In early Wednesday trading, the most active October Zhengzhou thermal coal futures rose 8% to 1,781 Yuan per tonne. This follows a 124% increase year-to-date. November futures increased 9.4%, to above 1,800yuan.

The coal surge comes a day after Beijing announced it would allow power plants to charge https://www.reuters.com/world/china/china-liberalise-thermal-power-pricing-tackle-energy-crisis-2021-10-12 commercial customers market-based prices for power, in a significant break from previous policy that allowed industry to lock in fixed-price power deals with suppliers.

It is likely that the policy shift will encourage more coal-fired electricity generation. This is one of a number of recent measures to help ease power supply shortages in China, which has caused many industries to cut back on power usage in recent weeks.