Coal supplies to stabilize for coming cold season

China is capable of ensuring stable coal supplies this winter and next spring with the increase in coal production and the rising stockpiles at power plants and ports, the country's top economic regulator said on Tuesday.

Experts said China's tight coal supply situation will gradually ease with the help of the government's effective measures to boost coal output.

Meng Wei, a spokeswoman for the National Development and Reform Commission, said the NDRC will continue to take targeted measures to ensure stable supplies and coal prices, including boosting production and strengthening supervision over the performance of medium and long-term coal contracts.

To meet growing energy needs during the heating season, Meng said the NDRC will also strive to increase natural gas supplies. More efforts will also be made to urge companies to operate at full capacity, increase supplies in key regions such as North China and stabilize natural gas prices for residential users.

Citing data from the National Bureau of Statistics, Meng said at a news conference in Beijing that the nation's coal output reached 360 million tons in October, up 4 percent year-on-year.

On Sunday, coal stockpiles at the country's major power plants reached 129 million tons, and the number is set to exceed 140 million tons at the end of this month. So far the coal inventories at major power plants are adequate for 22 days of consumption, an increase of nine days from the end of September, the commission added.

Meng said prices of both thermal coal and coal futures have dropped significantly following government measures to stabilize coal supplies and prices.

The most-traded thermal coal contract on the Zhengzhou Commodity Exchange closed down over 3 percent at 817.8 yuan ($128) a ton on Tuesday, which has more than halved from the record high of 1,982 yuan on Oct 19.

Zhou Maohua, an analyst at China Everbright Bank, said the government's recent moves to boost supplies and crack down on illegal activities such as hoarding and collusion in the market will help stabilize market expectations and curb irrational coal price hikes.

Zhou said that with the help of effective measures to stabilize coal supplies and prices, China is capable of alleviating tightness in the domestic coal market, and coal prices will gradually stabilize.

Tao Jin, deputy director of the macroeconomic research center of the Suning Institute of Finance, said coal price hikes are a result of multiple factors including price gouging and hoarding in the market.

Tao expects coal prices will stabilize in the short term, saying prices will drop gradually over the long term.

A new report released by the China Coal Transportation and Distribution Association showed the average daily coal output of key coal companies reached 7.25 million tons in October, up 4.6 percent year-on-year.

Looking ahead, the association said China's coal production will continue to grow this winter and next spring, and coal prices are expected to drop steadily.