China urges utilities to sign supply deals with coal miners as soon as possible

BEIJING, Oct 16 (Reuters) – China’s state planner encouraged utilities to sign long-term purchase contracts with coal producers for next year as early as they can to secure enough supplies for this winter as coal power plants ramps up inventory for peak demand season.

The National Development and Reform Commission (NDRC) – in a statement on Monday citing an internal meeting – also repeated a pledge to secure supplies for power plants in six northern regions including Heilongjiang, Liaoning and Jilin provinces, and the industrial sector made up of capital Beijing, Tianjin port and Hebei province.

The NDRC statement came as rallying coal prices, increasing safety checks and robust imports spurred more concerns of tight winter supplies.

China’s top coal-producing province, Shanxi, said on Saturday that it planned to close nine more coal mines by the end of this year, equivalent to 5.25 million tonnes of annual production capacity.

In September, some power plants in Heilongjiang province issued a plea to the NDRC asking for help with securing coal supplies.

Prices of thermal coal in China have jumped more than 50 percent since the start of this year, while coking coal futures have gained about 5 percent. The NDRC also said in its statement that relatively high level of stocks at the largest coal port Qinhuangdao and at major utilities showed the market is balanced this year.

The state planner as well encouraged efficient coal mines to increase their mining capacity.

NDRC intervened in the coal market last winter when a market rally fuelled worries of a imminent coal crunch. A flurry of measures such as capping contract prices and hiking production were taken to help ensure fuel supplies and ease market values.

(Reporting by Meng Meng and Beijing Monitoring Desk; Editing by Tom Hogue).