China coal short-term outlook October 2021

The huge increase in thermal coal prices finally triggered government interventions, as China’s power shortage will be critical heading up to the heating season. Measures were taken to increase thermal coal supply by approving new capacities and re-activating mine operations restricted by environmental and land issues. Meanwhile, power supply curtailments to energy-intensive sectors remained. With the key miners promising to ensure supply volumes within a set price range, spot prices started to decline. The metallurgical coal market received less focus from the government. A certain portion of coking coal was diverted to the tight thermal coal market, offsetting the loss in coking coal demand due to weak steel production, and finally supporting a high coking coal price. With coking coal volumes from Mongolia remaining unstable and increased steel production resulting in solid coking demand, we expect coking coal prices to remain high. For more details, please read our report.