Shivani Singh and Muyu Chu

BEIJING, (Reuters) – China’s woes in power are set to get worse as the price of coal rose to a new record Monday after data showed that China had dwindled its supply. This raises concerns about China not being able to keep up with rising electric generation demand.

The Chinese have been experiencing shortages of domestic coal, which has driven up fuel prices for their power generation plants. This forced the profit-hungry companies to limit power consumption to industrial consumers. Some factories of the largest country in the world have had to stop production and disrupt global supply chains.

China is also the largest energy consumer in the world. However, government data Monday revealed that these steps are likely to take some time, even though power demand rises post-COVID-19.

China’s last month coal production was 334.1 Million Tonnes, down 0.9% from August (335.24Million tonnes) and 0.9% from one year earlier (data from the National Bureau of Statistics, NBS).

The average output for September was 11.14 millions tonnes per day according to Reuters calculations based off the data.

Last week, the National Energy Administration (NEA), reported that current daily production has risen to over 11.2million tonnes. This indicates the slow pace at which meaningful supplies are being brought to market.

Alex Whitworth from Wood Mackenzie, heads Asia Pacific Power and Renewables Research said that the Chinese government was losing its battle to contain soaring prices for coal. “Despite attempts to increase coal supply in September, production fell due to logistic, weather and safety challenges. China’s exploding power demand has been difficult to control.

The NEA reported that September’s electricity consumption increased 6.8% compared to a year ago and rose 12.9% in the first nine months.

Chinese coal futures set a new record Monday due to mismatch between supply and demand. On Monday, January coal delivery was the most active contract. It rose by 11% to 1,829yuan ($284.15) per ton, signaling a belief of a persisting coal shortage.

China made a major step forward in reforming power by allowing some coal-fired power stations to charge higher prices to customers last week. This was done to increase power plant’s ability to produce more electricity, and reduce their profitability.

Whitworth said that recent price liberalization of coal utilities and industrial users is a sign that Whitworth isn’t confident in its ability to control coal prices.

($1 = 6.4367 renminbi)