At a press conference held by China’s National Development and Reform Commission (NDRC) on October 13, NDRC spokesman Zhao Chenxin stated that the NDRC together with relevant government departments have taken effective measures to stabilize coal supply and curb rapid rises in coal prices. For instance, at the beginning of September, they launched their second-level response, increasing overall Chinese daily coal output by 300,000 mt; in late September, they launched their first-level response, raising daily coal output by 500,000 mt. Meanwhile, they have further plans to relieve the shortage of coal supply: for example, some approved coal mines will be able to increase their number of working days in the fourth quarter of this year. On October 10, coal stocks at major power plants amounted to 59.88 million mt, up 9.18 million mt or 18.1 percent compared to the end of August, while coal stocks at Qinghuangdao port totaled 3.6 million mt, up 0.98 million mt or 37.4 percent compared to the end of August. This indicates that the measures taken by the NDRC and relevant government departments have shown some impact.
The NDRC spokesman also mentioned that the supply shortage and rises in coal prices were not only due to production cuts, but also due to some other elements.
First, China consumed more coal in thermal power generation as high temperatures and lack of rain continued in most regions from July on. Meanwhile, overall Chinese hydropower generation has declined sharply; for instance, hydropower generation increased by four percent year on year in January-June, while decreasing by 12.8 percent year on year in September. At the same time, household electricity consumption rose sharply due to high temperatures. In July, August and the first 20 days of September, thermal power generation increased by 4.8 percent, 7.3 percent and 12.9 percent year on year, respectively.
Secondly, illegal production and low quality coal production have been effectively curbed, which reduced coal supply to the market.
Thirdly, rainy weather has negatively affected coal transportation in some regions, while the new road traffic management regulations in China have also impacted coal transportation.
In addition, Mr. Zhao also said that, since the period for building up coal inventory for winter usage is approaching, the NDRC and relevant departments will remain in close touch with coal producers and downstream users, in efforts to stabilize coal supply and coal prices in the coming period.