Cold keeps China coal prices high, power crunch stokes factory inflation

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*China’s Meteorological Office forecast a sharp drop in temperature

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* Coal prices, increased demand due to increase in imports

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* Higher electricity prices feeding into factory gate inflation

BEIJING, Oct 14 (Businesshala) – China’s coal prices neared a record high on Thursday as cold weather swept through the country’s north and power plants stocked up on fuel to ease an energy crisis that loomed large. The unprecedented factory gate is fueling inflation.

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A widespread power crisis in China – fueled by coal shortages, record high fuel prices and a rapid increase in post-pandemic industrial demand as it turns to the green fuel – has halted production at many factories , including several large global brands such as Apple Inc.

Rising energy prices helped send the producer price index (PPI) in September to its highest in at least 25 years, rising 10.7 per cent year-on-year, official Chinese data showed on Thursday.

The situation is likely to worsen due to severe cold.

China’s National Meteorological Center predicted on Wednesday that strong winds could knock the average temperature up to 14 degrees Celsius over large parts of the country this week.

The three northeastern provinces of Jilin, Heliongjiang and Liaoning – the worst hit by power shortages last month – and several regions of northern China, including Inner Mongolia and Gansu, have begun heating up in winter, which is mainly coal-fed. so that it can be faced. Colder weather than usual.

Beijing has taken a number of measures to stem the rise in coal prices, including increasing domestic coal production, rationing electricity in factories and ensuring that energy supplies for the warm winter season will be ensured.

Earlier this week, China, in its boldest move in a decade-long power sector reform, said it would pass on the high cost of production to coal-fired power plants through market-driven electricity prices to commercial and industrial end-users. will be allowed to pass through.

Beijing was trying to reduce its reliance on polluting coal power in favor of clean wind, solar and hydroelectric power.

“Making sure that people are warm and keep business running – that’s obvious, of course you need to. Even as an environmentalist you don’t want to get into a situation where you’re going through climate change.” take the risk of turning society against us,” said Dmitry de Boer, chief China representative of European environmental consultancy ClientEarth. “But that should be coupled with deploying renewable energy as soon as possible, to avoid similar situations in the future.”

Local governments in the top Chinese coal-producing regions of Shanxi and Inner Mongolia have ordered some 200 mines to boost production, but flooding in top coal-producing Shanxi has scuttled the supply outlook, with analysts reporting power shortages and Rationing is expected to continue into early next year.

Banks are giving loans to coal mines to increase production. China’s top coal mining hub Shanxi Coking Coal Group has received a 1 billion yuan ($155.30 million) bank loan to restart operations from the floods, according to China’s central bank-backed newspaper.

Daily coal production has risen by more than 11.2 million tonnes since February, according to a National Energy Administration official at a news briefing on Wednesday, while the average coal stock at its power plants can support about 15 days of use .

Official data on Wednesday showed China’s coal imports last month hit their highest level this year.

More than half of Mainland China’s regions managed by the state grid have implemented power consumption cuts since last month.

The most active January Zhengzhou thermal coal futures were up 3% earlier on Thursday at 1,608.8 yuan per tonne. The contract was trading near record levels on Wednesday and is up over 200% so far.

($1 = 6.4392 Chinese Yuan Renminbi)

Reporting by Muyu Xu and Shivani Singh in Beijing; Additional reporting by David Stanway; Editing by Lincoln Feast

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