China says coal supply improving

China's coal supply situation has seen significant improvement with joint efforts from coal producers, logistics and downstream users, while coal prices have also stabilized, said the state planner.

The most-traded January thermal coal futures contract on the Zhengzhou Commodity Exchange fell 9.26 per cent to 925.2 yuan (US $ 144.48) per tonne early Monday. A series of cooling measures announced by China have caused futures prices to fall more than 53 per cent from their high of 1,982 yuan on October 19.

Since July, the government has approved capacity extensions in hundreds of coal mines across the country amid widespread electricity shortages in part due to insufficient supply, and has put in place a series of measures to contain the coal prices which have climbed nearly 190 per cent this year.

"The average daily coal production has reached over 11.5 million tonnes for a few consecutive days since mid-October, reaching as high as 11.72 million tonnes," said the National Development and Reform Commission (NDRC) in a statement released Sunday evening.

Reuters calculations show that China's new rate of coal production allows it to produce more fuel this year than ever before if the increase is sustained.

Meanwhile, the daily coal supply of major coal-fired power plants reached 8.32 million tonnes, the highest level in history.

This helps bring the total stock of coal in Chinese power plants to 106 million tonnes, up more than 28 million tonnes from the end of September, and these could support 19 days of consumption, the NDRC said.

The NDRC estimated coal stocks at power plants at over 110 million tonnes in three days.

Spot prices for thermal coal with an energy content of 5,500 kilocalories have fallen to less than 1,200 yuan per tonne in mines and less than 1,500 yuan per tonne in ports, while futures contracts on the Top-traded thermal coal has plunged 51 per cent in the past eight trading days, said the state planner.

Separately, on Sunday, the NDRC said it has set up an online platform to monitor the implementation of long-term coal contracts signed between coal miners and downstream users, and the system will be officially launched early November.

China has repeatedly urged coal companies to strictly meet their contractual obligations in an effort to stabilize coal prices.