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China’s coal futures and shares of coal miners are rallying on expectations of rising demand after coal inventories in coastal China decline amid surging power demand in recent heatwaves.
The most-traded thermal coal futures contract on the Zhengzhou Commodity Exchange, for September delivery, is jumping more than 4.2% to hit 879 yuan per tonne as of 10 am local time.
An Index tracking mainland-listed coal miners, compiled by Wind Information, is surging nearly 2%, making it one of the best-performing sectors in the A-share market.
The recent heatwaves that hit regions in East and South China has increased electricity demand and coal consumption, with daily coal consumption at power plants rising rapidly and coal inventories declining, according to coal industry information provider ocoal.com, citing industry sources.
Average daily coal consumption at coal-fired power plants in China’s eight coastal provinces rose to 2.23 million tonnes last Thursday, rising by 20,000 tonnes from a year earlier, and meanwhile, coal inventories at the power plants fell to 28.55 million tonnes, only enough for 12.8 days’ use, though it remained above the 10-day threshold for according to the information, adding that at the moment
In particular, East China’s Jiangsu and Zhejiang province are facing mounting challenges to meeting surging power demand, with some companies in Zhejiang province having received government notice to restrict power used, according to the report.
As high-temperature weathers are expected to last and restocking at the power plants are expected to further boost coal demand, it said.
