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Limited Production Volume in China Makes Coal Price Strengthen

Dominik Vanyi/Unspalsh

Wed 23 Aug 2023, 08:00 AM

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Coal prices strengthened at the close of trading last weekend. The price of coal futures for the August 2023 contract at ICE Newcastle Futures was observed to have risen 1.70% to a level of US$149.50/ton at the close of trading on Friday (18/8).

This coal price movement also occurred in the coal futures price for the September 2023 contract which grew 3.04% to a level of US$160.75/ton at the same trading time.

The coal price for the August 2023 contract reversed direction from trading the previous day which closed down 0.34% on 17 August 2023. Previously, coal prices had rallied for 10 consecutive trading days with an accumulated increase of 10.07% on 3-16 August 2023 .

Meanwhile, if you look at the movement throughout the year, the black gold price fell 63.01%. The price has also fallen 63.88% in the past year.

The strengthening of coal prices occurred due to ongoing mine safety inspections in China as the world's largest coal producer, thereby limiting production. According to Reuters , China's average daily coal production in July fell to its lowest level since October.

Data from China's National Bureau of Statistics (NBS) show that China's coal production reached 377.54 million metric tons last month or the equivalent of 12.18 million tons per day. The figure is down 6.3% from June but is about the same as July 2022.

Safety inspections carried out at Chinese mines came after two fatal accidents occurred at the main coal hub Shanxi last month. As a result, inspections were tightened and production at several mines was suspended.

According to data compiled by data provider Wind, the average operational rate at 442 major coal mines in Shanxi, Shaanxi and Inner Mongolia fell from 82.4% to 81.2% at the end of July. Analysts expect safety controls to be in place for the remainder of 2023 thereby limiting coal production in the country.

Meanwhile, coal prices in China have fallen over the past month due to high import volumes, rising inventories, and sluggish industrial demand. This condition makes mining operations also become discouraged.

For information, during the first seven months of 2023, China's coal production reached 2.67 billion tons, up 3.60% from the same period in 2022.

Image source: Dominik Vanyi/Unspalsh

Source:https://dataindonesia.id/bursa-keuangan/detail/volume-produksi-di-china-terbatas-harga-batu-bara-menguat

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