Record-High Production And Rising Imports Depress Coal Prices In China

The price of coal in China is falling. The trend has been enabled by record-high production of the hydrocarbon fuel at home as well as rising imports.

Per Bloomberg, this means that the winter is unlikely to bring with it power crunches like the ones seen in the past when shortages of fuel for power plants caused outages.

Citing data from the China Coal Transport and Distribution Association, Bloomberg noted that coal power plant operators had replenished their stocks for the winter and demand has temporarily slowed.

“There’s no pressure to buy more until the weather gets colder, likely in late November,” an analyst from the association told media this week.

China, which is the biggest producer of wind and solar power, is also the biggest fan of coal still, planning to add a massive increase in its generation capacity, signing permits for an average of two new coal power plants per week.

In the first half of the year, permits were granted for 52 GW of new coal power capacity. New coal capacity additions to the grid during the period stood at a much lower but still substantial 17.1 GW, according to data from Global Energy Monitor and the Centre for Research on Energy and Clean Air.

There is some 136 GW of new coal capacity under construction, which equals 66.7% of the global total. At the same time, demand is rising as the number of EVs on Chinese roads increases and as various industries return to business as normal after the pandemic.

A Reuters report from September suggested that China’s additions of coal generation capacity had a direct causal link to rising EV numbers, ironic as it might seem. A more recent report, authored by market analyst John Kemp, noted that demand for electricity in China has surged recently, prompting record generation, most of which came from hydro and coal.

By Irina Slav for Oilprice.com

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