NDRC Meets With Key Chinese Coal Producers Tomorrow, Will Review Supply and Demand
Yicai Global
/SOURCE : Yicai
NDRC Meets With Key Chinese Coal Producers Tomorrow, Will Review Supply and Demand

(Yicai Global) Oct. 24 -- Concerned about the strong rally in coal prices, the National Development and Reform Commission, China's top economic planner, has called a meeting of key coal producers to be held tomorrow, Yicai Global has learned.

Some 22 major coal enterprises including China Shenhua Energy Co. [SHA:601088], China Coal Energy Co. [SHA:601898], Jizhong Energy Resources Co. [SHE:000937], Shanxi Coking Coal Group Co. and DaTong Coal Industry Co. [SHA:601001] will attend.

The meeting is expected to review the current supply and demand in the coal market with the aim of ensuring effective capacity reduction, reliable coal supply, business transformation and the healthy development of coal mining businesses.

Coal prices have been on the rise since the beginning of the year after many years in decline. China's Bohai-rim Steam-Coal Price Index, a benchmark coal price index, rose by 53.8 percent this year, hitting a new yearly high of CNY570 (USD85) per ton recently, due to market speculation.

The NDRC has been requesting coal producers to increase output in order to stem the rise in prices. Since September, coal outputs have increased by 500,000 tons a day. However this is still a slower pace than expected, according to a survey taken after the National Day public holiday in early October, because it takes time to ramp up production volume and some companies are not keen to do so because work safety equipment is not yet in place.

Coal remains in short supply and prices are expected to continue to rise, said Mr. Deng Shun, analyst at global coal market analysis website ICIS, told Yicai Global. The upcoming winter will further stimulate demand, meaning that supply will outstrip demand in the coming months, he said.

Mr. Deng predicts that the NDRC will focus on stabilizing coal supplies while ensuring effective capacity reduction at the meeting tomorrow.

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