Coal prices rising beyond expectations may persist until the end of March

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Author/Source: China Fertilizer Network. Recently, coal mine safety inspections have been intensified, with many coal mines ordered to suspend operations; this has further exacerbated the shortage of coal supply, leading to prices rising more than expected. 　　Industry experts say that the prolonged safety inspections in coal mines are likely to reduce supply in coal-producing areas, which has led to rising coal prices recently. 　　However, since the coal production restriction plan has been determined not to be implemented on a large scale, this means that coal supply will remain relatively ample, and a decline in coal prices is an inevitable trend. 　　Analysts say that coal prices are expected to see a slight increase before the end of March, but after April, as coal mine operations gradually resume, an oversupply will prevail in the market, and a decline in prices will be the general trend. 　　Multiple coal mines have been ordered to suspend operations. Recently, due to the frequent occurrence of accidents in coal mines, relevant authorities have held successive meetings on work safety, calling for comprehensive safety inspections of these mines from March through the end of the year; as a result, efforts to conduct safety inspections in coal mines are being intensified across various regions. 　　Not long ago, the Ministry of Land and Resources, the **General Administration of Work Safety Supervision and Management**, and the **Coal Mine Safety Inspection Bureau** jointly issued a notice on carrying out a special inspection and rectification campaign against illegal mining beyond designated limits in coal mines. This notice specified that such a campaign would be conducted across the country from March to August. This marks a comprehensive upgrade in the intensity of coal mine safety inspections. 　　On March 14, the Energy Bureau issued a statement stating that coal mines must strictly comply with relevant laws, regulations, rules, procedures, standards, and technical specifications, and must not operate beyond their capacity. According to **the relevant requirements, coal mines that are required to adopt reduced-production practices must base such efforts on the capacity specified in their registration announcements, strictly implement the measures related to reduced production, and voluntarily submit themselves to industry oversight and public supervision. 　　Subsequently, Shanxi Province issued an \"Urgent Notice on Immediately Carrying Out Actions to Crack Down on Overcapacity Production in Coal Mines,\" ordering coal industry bureaus at all levels, coal mine safety inspection branches (stations), and key state-owned coal enterprises to organize immediate surprise inspections aimed at cracking down on overcapacity production. 　　At the same time, Shaanxi Province also issued the \"Notice from the Shaanxi Provincial Work Safety Committee on Carrying Out Comprehensive Safety Inspections of Coal Mines across the Province,\" to launch a special campaign for comprehensive safety inspections in all coal mines in the province. 　　It is understood that 22 coal mines in the Yulin area have been ordered to suspend operations, including the two large coal mines of Jinjitan and Hanglaiwan. This has led to a reduction in the overall coal production in that region, and the tight supply of coal has contributed to rising coal prices. 　　In addition, the Yunnan Provincial Coal Supervision Bureau recently issued a notice titled \"Notice on Carrying Out Special Safety Inspections of Coal Mines,\" stating that from this month until the end of the year, 647 coal mines will undergo special safety inspections, with issues identified in each mine and corresponding solutions proposed, in order to effectively prevent and curb serious accidents in coal mines. On the same day, the Yunnan Provincial Work Safety Committee Office issued the \"Work Plan for Comprehensive Safety Inspections of Coal Mines.\" 　　The industry believes that the prolonged duration of these safety inspections in coal mines is likely to reduce supply in coal-producing areas, which will help alleviate the situation of oversupply that has existed since the restriction of 276 working days per month on coal mining operations was lifted. 　　Jing Wenjuan, an analyst at Zhuochuang Information, told a reporter from the Securities Daily that on the port side, strict safety inspections in the main production areas of thermal coal and increased environmental protection measures have, to some extent, restricted the amount of coal that can be shipped to ports in the north. With active purchasing activity downstream, coal inventory at the Qinhuangdao port remains low, and there is a shortage of high-quality coal resources, all of which contribute to the continuous rise in coal prices. 　　A trader at a port also said that recently, the selling price of low-sulfur coal with a calorific value of 5,500 kcal at Qinhuangdao Port reached as high as 690 yuan per ton. The short-term supply shortage is contributing to the continued rise in the prices of thermal coal at ports in the north. 　　A downward trend in coal prices is an inevitable outcome. It is worth noting that the coal production restriction measures anticipated by the market will not be implemented on a large scale, which means that coal supply will remain relatively ample. 　　The National Development and Reform Commission stated that, given the current situation, as efforts to reduce coal production capacity advance, a number of inefficient and unproductive production capacities are being phased out more rapidly. Illegal construction of coal mines and overproduction have been effectively curbed, resulting in a significant improvement in the supply-and-demand balance in the coal market. There was no longer a need to implement large-scale measures to reduce coal mine production in 2017. Coal prices are expected to decline steadily and will not rise significantly. 　　Furthermore, at present, the relevant departments are working on formulating policy plans for after the heating season ends. The basic principle is that coal mines with advanced production capacity and those producing particularly scarce types of coal should, in principle, not implement measures to reduce production ； In regions where a large volume of coal is imported and where there is significant pressure to maintain supply levels after capacity reduction, it is up to the provincial authorities in those areas to decide whether to implement measures to reduce production; no mandatory requirements are in place ； As for whether and how measures to reduce production will be implemented in the non-advanced production capacities in other regions, the relevant authorities will make comprehensive considerations based on the conditions of the coal market, taking into account factors such as regional supply and demand for coal, its distribution, transportation, varieties, and seasonal demand. As long as coal prices remain above the reasonable range (that is, the specified green range aimed at preventing abnormal fluctuations in coal prices), no measures to reduce production will be introduced. 　　Therefore, the industry believes that due to a relatively ample supply and demand for coal, a decline in coal prices is an inevitable trend. 　　Jing Wenjuan said that in March, due to the holding of ** and the frequent occurrence of coal mine accidents, safety inspections in the main production areas were intensified, resulting in a tight overall supply of coal. It is expected that there will be further slight increases in the price of thermal coal before the end of the month. However, after April, as the operation rate of coal mines gradually recovers, an ample supply will prevail in the market, and a decline in prices will also be the general trend.