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China's State planner urges coal mines to speed up output hikes - sources

(REUTERS)
Updated: 2016-10-26 11:01
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    China's state planner urged coal miners to speed up the pace of output increases to tame the historic spike in prices at a meeting on Tuesday, two sources said, the latest sign Beijing is worried about dwindling supplies ahead of the winter.

    At a hastily called meeting with 16 coal miners, the National Development and Reform Commission (NDRC) told producers they should increase supplies to the market as soon as possible, a source who was at the meeting and a source who was familiar with the contents of the meeting said.

    The two sources requested anonymity because they were not authorised to speak to the press.

    The NDRC did not respond to requests for comment.

    The government representatives repeated their pleas for mines to ramp up output increases approved last month and to sign long-term supply contracts with end-users, the sources said.

    Market experts had speculated ahead of the meeting that the NDRC would introduce even more radical steps to boost output, such as ditching a rule that limited some mines to operating only 276 days in a year.

    The 276-day limit was not discussed on Tuesday, however, said one of the sources who attended the meeting said.

    Miners including Shenhua Energy Company and China CoalEnergy attended the meeting, said of the sources.

    The flurry of meetings over the past six weeks have illustrated Beijing's challenge in enforcing its long-term clean energy policy and curbing excess coal capacity, while also ensuring sufficient supplies to power companies.

    The government is worried that soaring prices will hurt utilities' profits and lead to higher residential and corporate energy bills during the busiest period of the year, the sources said.

    Steps to boost output have done little so far to snuff out a wild rally in coal prices.

    Thermal coal futures for January delivery hit fresh record highs, while coking coal, a feedstock for steelmakers, soared to three-year highs on Tuesday.

    Aside from the closure of coal mines, market sources say a major problem has been new regulations on trucking that have caused logjams in deliveries and spikes in transportation prices.

 

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