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China's top coal province commits Q4 supply to 14 regions amid power crunch

China's top coal province commits Q4 supply to 14 regions amid power crunch

FILE PHOTO: A worker walks past coal piles at a coal coking plant in Yuncheng, Shanxi province, China January 31, 2018. REUTERS/William Hong/File Photo

China's biggest coal-producing province of Shanxi on Wednesday stepped up to commit supply to 14 other regions for the fourth quarter, state media reported, as a shortage of the fuel leads to widespread power restrictions.

At a "matchmaking" conference in provincial capital Taiyuan, Shanxi signed medium and long-term coal supply deals with regions including the industrial hubs of Hebei, Shandong, Jiangsu and Zhejiang, the official Xinhua news agency said.

Coal is the main source of power generation in China.

"The signing of medium and long-term coal contracts is an effective measure adopted ... to stabilise the balance of coal supply and demand and curb the excessively rapid rise in coal prices," the report added.

Thermal coal futures in China have surged 50per cent this month. They hit a record high above 1,300 yuan (US$202) a tonne in Wednesday's daytime session but fell more than 3per cent in night trading.

Shanxi produced 1.06 billion tonnes of coal in 2020, official data show, according for more than a quarter of the national total. The province acts as a "pillar" in meeting the country's energy needs, Xinhua said.

Tight supply has seen regions all over China ration power use, curbing industrial output and prompting banks to revise down GDP growth forecasts for the world's second-biggest economy.

Central government-run coal enterprises in Shanxi will ensure supply to Tianjin, Fujian, Hebei, Liaoning and Guandong, while Jinneng Holding Group will supply Guangxi, Jiangsu, Jilin, Anhui, Shanghai, and Zhejiang, the report said.

That leaves Shanxi Coking Coal Group to supply Henan, Huayang New Material Technology to supply Hainan and Luan Chemical Group to guarantee supply to Shandong.

Earlier on Wednesday, the People's Daily reported coal for heating and power generation in the northeastern provinces of Jilin, Heilongjiang and Liaoning, where night-time temperatures are already close to freezing in parts, had been ensured after suppliers and producers signed coal supply contracts.

(US$1 = 6.46597 Chinese yuan renminbi)

(Reporting by Tom Daly; Editing by Mark Potter)

Source: Reuters

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