China’s Power-Station Coal Price Declines for First Time in Three Months

China’s benchmark thermal-coal price fell for the first time in three months, dropping from a three- year high as utilities finished building stockpiles for winter.

Coal with an energy value of 5,500 kilocalories per kilogram at Qinhuangdao port slid 0.6 percent to a range of 845 yuan ($133) to 855 yuan a metric ton yesterday from a week earlier, according to the China Coal Transport and Distribution Association today. That’s the first decline since Aug. 14, the association’s data shows.

Chinese utilities typically start to buy the fuel they need for winter heating demand in September and complete stockpiling by November. The nation’s largest power stations held 70.9 million tons of inventory as of Oct. 18, the equivalent of 20 days of consumption, the National Development and Reform Commission said last month.

“Stockpiles at power stations are very high and there’s no reason why they need more than what they already have now,” David Fang, a director at the association, said by telephone from Beijing. “Prices will go even lower from here, at least until another round of stockpiling during the coldest periods early next year,” he said.

Inventories at Qinhuangdao, which ships half of China’s seaborne coal supplies mined from inland regions, fell 2.5 percent to 5.89 million tons as of yesterday from a week earlier, according to the data.

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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