China’s coal shortage eases after Beijing steps in, CBA report shows
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On October 28th, 2021 large machines loaded coal onto a train at Shanghai Cooperation Organization’s (Lianyungang), International Logistics Park Station in Jiangsu Province.
Getty Images| Barcroft Media | Getty Images
BEIJING — China’s coal shortage is easing thanks to new government policies, the Commonwealth Bank of Australia said in a note Tuesday.
According to the report, the number of Chinese provinces with significant power shortages fell to two in mid-October — down from 18 at the start of the month. According to the bank, this is due to a shortage in demand and supply of over 10%.
Analysts stated that “the number of coal power stations with dangerously low coal stocks (less than seven days) has decreased also by 90% over the same period.”
China’s shortage of coal grew worse in September. This prompted authorities to take action. abruptly announce power cuts for many factories.As a result factory production declined. prompting several economists to reduce their forecasts for GDP growth.
In September and October, the official Purchasing Managers Index (a measure of manufacturing activity) fell to contraction territory. Third-quarter GDP came in weakerBanks had been in business longer than expected by analysts. trimmed their full-year growth forecasts.
The Chinese authorities attempted to resolve the issue of coal scarcity in recent weeks with several measures, including addressing speculation about coal futures and allowing for more coal production. That’s despite pressure to meet targets for reducing carbon emissions — which the national economic planning agencyTwenty regions were criticized for their failure to meet August deadlines.
Chinese authorities intervene
Authorities have taken a new approach to coal development because of the immediate power crisis.
The People’s Bank of China in October said that banks shouldn’t cut down loans for coal projects. According to CNBC’s Mandarin-language translation,
Around the same time, China’s State Administration of Coal Mine Safety said that national coal production can likely increase by about 600 tons a day, for total production of 55 million tons in the fourth quarter.
China bought coal as well to make up the gap. The country’s imports of the fossil fuel jumped 76% in SeptemberFrom one year ago.
Imports of thermal coal, the primary fuel for electricity production, have climbed — particularly from Russia and Indonesia.
Limiting coal price speculation
The Zhengzhou Commodity Exchange traded thermal coal futures almost tripled between Dec. 2020 and Oct. 19. Wind Information reports that thermal coal prices plunged 50% after hitting an all-time high of 1,982 dollars ($310) per ton.
China’s electricity producer have been facing operational challenges due to the fact that the Chinese state decides the cost of electricity.
China’s economic planner stated that in October, it will allow the market to decide electricity prices. In addition, it has repeatedly stated over the past weeks that it will crack down on speculation regarding coal prices.
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