Coal futures jumped to 689.8 yuan ($104.26) per tonne, topping a previous all-time high of 688.8 yuan set a week ago.
BEIJING: China’s thermal coal prices jumped to a record high on Monday as natural gas shortages across the north spurred an unexpected resurgence in demand for the fuel from utilities, tightening supplies in the world’s top importer of the commodity.
Coal futures jumped to 689.8 yuan ($104.26) per tonne, topping a previous all-time high of 688.8 yuan set a week ago. Spot cargo prices for thermal coal out of Australia’s Newcastle port, which acts as an Asian benchmark, have also risen.
The increase comes after Beijing was forced last week to put on hold its ambitious push to convert millions of households to gas or electric heating because of a gas supply crisis, telling people they can return to coal heating if needed.
On Monday, state media reported the capital city Beijing will restart a coal-fired power plant to help ease the gas shortage.
“Coal demand is expected to increase due to Beijing’s recent backtracking on policies, which therefore help support coal prices,” said Xu Bo, analyst at Haitong Futures.
Coal stockpiles at six major coal-fired power groups sank to the lowest level since Oct. 31 at 11.82 million tonnes on Friday, data from Mysteel consultancy showed. Inventory of coal at the ports in northern China has also been dropping since heating season kicked in in mid-November, the data showed.
Winter is usually the busiest period for coal-fired power plants, which account for majority of the country’s power. But this year regions in northern China have been promoting clean energy, such as gas and renewables, as part of Beijing’s efforts to curb emissions.
The rising price will stir concerns about soaring electricity prices with domestic liquefied natural gas (LNG) prices also surging as heating demand spikes with temperatures falling below zero in the north.
LNG prices have jumped by more than 70 percent since the winter heating season started in mid-November, mostly driven by Beijing’s dramatic push to convert millions of households to gas or electric heating from coal. It topped at 8,000 yuan per tonne last week.
Four central government branches, including the National Development and Reform Commission and the Ministry of Environmental Protection, will send inspection teams to 11 provinces across northern China to ensure households have heating during winter, Xinhua news agency reported on Friday.