China’s coal demand gets boost as heatwave lifts aircon use
Central and eastern China are experiencing widespread hot and humid conditions
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CHINA’S thermal coal prices are rebounding as a mild start to summer finally gives way to hotter weather, boosting air-conditioner usage and power demand.
Spot prices in Qinhuangdao reached 822 yuan (US$821) a ton on Monday, paring a 7 per cent decline earlier in the month that saw them fall to a low of 797 yuan a ton on Jul 13, according China Coal Resource.
Prices could rise further as intense heat grips much of the nation, according to the China Coal Transportation and Distribution Association.
“Thermal coal prices are more likely to rise than fall, as the peak season for coal-fired power consumption is far from over, the impacts of El Nino have yet to fully materialise, and the cumulative effects of tightening supply and growing demand will continue to build,” Li Xuegang, senior analyst at the association, said on a Wednesday webcast.
Central and eastern China are experiencing widespread hot and humid conditions as two high-pressure systems merge to form a heat dome, according to the China Meteorological Administration.
Many areas — from the remote north-west region of Xinjiang to the heavily populated eastern seaboard — could see highs of 37 deg C in coming days, it added.
Northeastern China will also see unusually high temperatures into the weekend, with the most anomalous warmth concentrated in the cities of Beijing and Shenyang, according to Paul Markert, a meteorologist at commercial forecaster Vaisala.
Coal prices had slipped earlier this summer as utilities built up stockpiles in anticipation that El Nino would bring heat and drive up air-conditioning demand. Instead, much of the country was doused with heavy and persistent rainstorms that cooled temperatures and helped boost hydropower generation — offsetting some coal demand.
Hydro generation is likely to weaken in coming months after rising 9.3 per cent over the first half of the year from 2025 levels, according to the coal association. The group also expects weak wind and solar generation during the summer.
While China’s coal stockpiles are still high, domestic production remains constrained after a deadly accident in Shanxi in late May led to widespread safety inspections that choked output in one of the country’s top mining regions. Production in the province fell 32 per cent in June. BLOOMBERG
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