Rising coal prices a sign of fuel shortage in the coming months

Rising coal prices a sign of fuel shortage in the coming monthsThe average price of coal have been slowly rising since power demands from factories and increasing construction activity, that have been pushing China’s thermal coal prices for a fourth week. This shows a growing sign and warnings of fuel shortage this coming summer.

The weekly price for a coal with heating value have already climbed to 790 to 800 yuan and have already reached a monthly high of 815 yuan. Coals that have a heating value of around 6,000 kcal is maintaining its price at 845 yuan. With power consumption rising fast, utilities are using up more coal than expected and have been replenishing stocks more quickly. But producers in Hangzhou are saying that the mines coal output is not putting out as much as demanded. Sources say that there is a lag time in the supply to constantly supply the demand for the coal. Also the bottlenecks that are currently being experienced in the country’s railways will further push the coal shortage supply in the following months.

National Energy Administration have already started to issue warnings that the Chinese people must prepare themselves in case of power shortfalls in the energy consuming summer months. Other companies are also advised to take necessary precautions on the coal supply shortage. Consolidations efforts have also slowed the output growth in the other coal producing provinces and local governments have started to close small and unsafe mines.

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