China Coal Prices Reach 9-Month High on Winter Demand

Coal prices at Qinhuangdao port, a benchmark for China, rose to the highest in nine months on expectations of a colder-than-usual winter.

The price of power-station coal with an energy value of 5,500 kilocalories per kilogram rose 2.7 percent to between 755 yuan ($113) and 775 yuan a metric ton as of today, compared with a week earlier, according to data from the China Coal Transport and Distribution Association. That’s the highest since Feb. 8.

China will likely have abnormally low temperatures this winter because of the La Nina weather pattern, the official Xinhua News Agency said in August. Coal prices have gained 7 percent since the start of September, when power stations started stockpiling coal for the winter, data from the association showed.

“There’s some speculation in commodities markets of a harsh winter and that’s helping coal prices,” David Fang, a director at the Coal Transport and Distribution Association, said by telephone from Beijing. “Prices should top 800 yuan a ton this winter based on our expectations of fundamental demand, barring unforeseen situations like natural disasters.”

China’s power supply and demand are expected to remain balanced in winter and spring, the National Development and Reform Commission said on Oct. 29. About 80 percent of the country’s electricity is fueled by coal.

Coal inventories at power plants supplying China’s grid operators rose 6.6 percent in the month through Oct. 10 to a total of 62.8 million tons, latest data from the China Coal Transport and Distribution Association showed. That’s enough for 21 days of consumption, compared with 18 days a month earlier.

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