NDRC: China's power plants hold 210 mnt of coal, enough for 34 days of use

• China's thermal coal stocks remain strong at 210 mnt, ensuring comfortable summer supply
  
  
• Mine resumptions may ease supply concerns, while demand remains the key price driver
  
  

Mysteel Global: China's major power generators held 210 million tonnes of thermal coal in stock as of June 16, enough to cover around 34 days of consumption, the country's top economic planner, the National Development and Reform Commission (NDRC), said on June 18. This shows that as the peak summer season progresses, fuel availability is at a comfortable level, Mysteel Global notes.

The figures were disclosed at a press conference held by the NDRC, where spokesperson Li Chao said that ensuring coal availability remains a key priority for the government.

"Safe and stable coal supply is a crucial part of energy security," Li said, adding that the NDRC had convened a nationwide video conference on May 26 to coordinate energy supply and power generation ahead of the summer peak-demand period, which typically lasts from June to August.

The commission said it will continue guiding coal production, transportation and contract fulfilment while maintaining strict safety standards across the mining sector.

In particular, the NDRC reiterated its long-term contract policy, under which coal producers are required, in principle, to allocate at least 75% of their output to medium- and long-term contracts, while power producers should secure no less than 80% of their coal demand through such agreements, as Mysteel Global has reported.

The latest comments are likely to ease market concerns over potential supply shortages following the nationwide safety inspections launched after the fatal gas explosion at a coal mine in Qinyuan county, North China's Shanxi province, on May 22, as reported. Although such inspections are mainly focused on coking coal mines, thermal coal producers are also affected, resulting in a notable price rally in producing hubs this week.

Yet, recent surveys suggest coal production is gradually recovering as safety inspections move into the rectification and resumption stage. According to Mysteel's latest survey, a coal mine in Qinyuan with annual production capacity of 1.5 million tonnes resumed operations on June 18, becoming the first mine in the county to restart after all local mines were ordered to suspend production immediately after the accident. Several other mines are also preparing to resume operations pending final safety inspections, the survey findings showed.

Despite the improving supply outlook, market participants said demand from power utilities during the coming weeks will remain the key factor determining whether steam coal prices can hold at current levels through the summer peak season.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.