Record High Chinese Coal Futures Prices After Biggest Coal Producing Region Floods

Coal prices have risen unabated with supply chain disruptions, China has been particularly badly hit and that just got more critical. Floods closed 60 of the 682 coal mines in Shanxi province, 30% of China’s production.

Thermal Coal Futures 10 11 21


Torrential rains has led to flooding and expanded mine shutdowns in China’s biggest coal producing region, Shanxi province. In a market already squeezing higher this latest news sent Thermal coal futures to a new intraday record after trading opened Monday. Beijing is ina dangerous place heading into winter with supplies already strethed through it’s trade war with Australai and prices in the coal stratosphere.

Shanxi province floods

Shanxi province to shut down

The powerful State Council on Friday said it will allow higher electricity prices in a bid to boost generation amid the rising costs. Floods closed 60 of the 682 coal mines in Shanxi province, which has produced 30% of China’s supply of the fuel this year according to Bloomberg.

A series of supply shocks from a lack of mine investments among other things are attributable to the coal price surge along with the strength in natural gas prices. Domestic coal supply disruption started from the anti-corruption campaign in Inner Mongolia last year, followed by a few rounds of heightened safety inspections and environmental checks. From there we have seen a record cold winter, a showdown with Australia who are the biggest coal exporter in the world and the CCP trying to implement emission standards.

Thermal coal, which is used mainly by utilities to produce electricity has seen prices triple to about $200 a metric tonne in Australia. Glencore has sizable operations in Australia and produces thermal coal and metallurgical coal, which is used to make steel.

ICE NewCastle Coal Oct ’21 (LQV21) 210.50s +2.80 (+1.35%) 09/29/21 [ICE/EU]

ICE Newcastle Coal 9 29 2021

Chinas Power Rationing 21 9

In China 12 provinces have identified coal supply shortage as the key reason behind for power rationing or rolling blackouts. In the three provinces in northeast China. Liaoning, Jilin and Heilongjiang, in particular, even residential power usage is affected, a rare occurrence for a country putting household energy supply in a prioritized category. For most provinces, industrial power rationing remains the key measure a report by IHS Markit said.

Thermal Coal Futures China 9 29 21

Source: BloombergIHS Market

From The TradersCommunity Research Desk