China Miners Jump as Coal Price Seen Rising on Tight Supply

  • Shenhua advances to the highest price in more than a year
  • Coal-fired power generators decline as fuel costs seen rising

China’s biggest coal miners jumped on speculation producers won’t be able to boost domestic output fast enough before winter. Coal-fired power generators fell.

China Shenhua Energy Co. rose 3.9 percent in Hong Kong trading to close at HK$16.72, the highest since July 2015. State-owned rivals including China Coal Energy Co. and Yanzhou Coal Mining Co. both jumped 5 percent or more, while generator China Power International Development Ltd. fell 3.3 percent. Power-station coal in northeast China rose to the highest in four years on Sunday.

“There’s a growing concern coal prices may continue to rise as major coal producers haven’t quickly added extra supplies to the market,” said Leo Wu, an analyst at Guotai Junan Securities Co. “It’s all about the price expectation. A higher coal price helps producers, while it hurts utility margins.”

Production of the fuel has fallen after the government of President Xi Jinping ordered miners to lower output to the equivalent of 276 days of production, down from 330 days. While the nation’s top economic planner fine tuned the policy last month to allow some miners to increase output in an effort to cool prices, so far that wasn’t enough to boost production which dipped 0.4 percent last month to 276.96 million tons.

Domestic benchmark power-station coal price at the port of Qinhuangdao climbed to the highest since July 2012 on Oct. 23, averaging 640 yuan to 650 yuan per ton, according to the China Coal Transport and Distribution Association.

Coal-fired generator Huadian Power International Corp. lost 0.9 percent to close at HK$3.42, while Hong Kong’s benchmark Hang Seng Index gained 1 percent.

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