(Yicai Global) Sept. 16 -- The surging cost of raw materials, such as coal, chemical products and steel, drove China’s producer price index, an indicator of corporate profitability, to a 13-year high in August and seem set to continue to rise amid continued tight supply, according to industry insiders.

International commodity prices remain elevated and it is uncertain what the future trend will be, Fu Linghui, spokesperson for the National Bureau of Statistics, said yesterday. China’s PPI could remain high in the short term, he added.

Demand for coal is likely to continue to outstrip supply, meaning that prices will probably keep rising for some time to come, said Ye Yong, fund manager at Wanjia Asset. Research has found that new coal production capacity next year and in 2023 will be extremely limited.

The spot prices of coking coal and coke have jumping sharply in the last few months and their futures prices have hit new records. The main coal contract surged to an all-time high of CNY1,048 (USD163) per ton on Aug. 15. Coke futures have leapt 33 percent since July and coking coal futures 43 percent.

On the one hand, the supply of some products is tight and prices are under pressure to rise, Fu said. On the other, the government’s measures to ensure supply are coming into effect, which is keeping the lid on pricing.

Coal, especially thermal coal, is vital to the country’s power supply and the operation of its main industries. Should the price rise too fast, downstream industries will be greatly affected and this will trigger more regulation from the government, Ye said.

Editor: Kim Taylor