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Thermal coal prices rise in China on shipment disruptions

Thermal coal prices in major Chinese producing regions started rising after heavy snowstorms earlier in the week disrupted road transportation and weighed on output. Of the 90 coal mines surveyed by Sxcoal on 22 February, none cut prices while eight raised prices by RMB 37.3/tonne (t) on average. The remaining 82 kept prices steady.

Snowstorms swept across northern China this week, blocking roads and suspending operations at some mines in Yulin, Ordos and most parts of Shanxi, adding to the supply shortage that has been in place since production reduced significantly during the Chinese New Year holidays.

Transportation gradually resumed following the easing of snowfall starting late 21 February. Some local chemical factories and wholesalers in railway stations decided to send trucks for coal loading. “The impact from the snowstorms has basically ended as transportation networks have recovered,” said a Shanxi-based trader. Meanwhile, the top coal mining group raised prices for its latest coal procurement from other mines by RMB 15/t from the pre-holiday level. The price increase prompted a few mines in Ordos, Inner Mongolia, to lift prices immediately.

One miner in Shaanxi noted that normal coal sales resumed at 10:00 am on 22 February after snowfall, with an RMB 20/t price lift for all coal grades. Prices for 3-8 cm lump coal reached RMB 920/t, while that for 8-15 cm lump coal came in at RMB 890/t.

In Ordos, thermal coal prices ticked up at some mines after fresh demand emerged. Prices for 5,300 Kcal/kg NAR slack coal with 0.5% sulphur rose RMB 10/t to RMB 650/t, mine-mouth with VAT, a local miner reported.

One miner based in Shuozhou, Shanxi, also raised selling prices amid low shipping demand. He offered 5,500 Kcal/kg NAR slack coal with 0.9% sulphur at RMB 690/t, while 5,000 Kcal/NAR slack coal with 1% sulphur increased RMB 5/t to RMB 590/t, both without VAT. However, many coal mines haven’t yet fully resumed sales, so their prices were not adjusted from the pre-holiday levels. In addition, as the overall demand remained largely tepid, miners opted to maintain prices stable for further clarity.

Mines that halted operations due to the extreme weather have mostly resumed, despite not being in full capacity. The market saw little impetus for prices to move strongly in either direction, some miners added.

On February 22, Sxcoal assessed Datong 5,500 Kcal/kg NAR thermal coal at RMB 760/t, RMB 2/t higher than a day ago, Ordos 5,500 kcal/kg NAR kept flat at RMB 694/t, and Yulin 5,800 kcal/kg NAR coal stable at RMB 795 /t, all on mine-mouth basis with VAT.

Source: CoalMint