Singapore (Platts)–20 Jan 2016 744 am EST/1244 GMT
Coal demand from China’s power generation sector may improve in the coming week, on the back of an expected cold front that will mostly affect the northern parts of the country, industry sources said Wednesday.
China’s National Meteorological Center on Wednesday had forecast a rapid drop in temperatures — mostly in northern China — by as much as 14 degrees Celsius over January 21-25, a source from the center said.
He added that a cold wave with rain and snow could even hit southeastern Jiangxi province, noting that it could be the coldest week the area would experience since 1992.
This could lead to an improvement in demand from coal-fired power generators, lending support to coal prices, said an end-user source in Beijing.
Further potential upswing to coal prices could also come from logistical issues related to cold weather.
Temperatures at China’s major coal producing regions in Shanxi and Shaanxi provinces, as well as the western part of Inner Mongolia were forecast to fall to between minus 47.5 and minus 20 degrees Celsius, the end-user source said. This could lead to additional charges for anti-freeze fluid in railway costs, the same source added.
“The strong cold and snowy weather before the Lunar New Year [starting February 8] will affect the transportation of coal by truck and [operations] at ports,” a Beijing-based trader said.
The State Grid Corporation of China said the grid load for Beijing had hit a record high of 16.6 MW on Monday evening, as cold weather caused a surge in heating demand.
Meanwhile, the PCC 1 price for domestic thermal coal with a calorific value of 5,500 kcal/kg NAR traded at Qinhuangdao port was assessed at Yuan 368/mt FOB Wednesday, and the PCC 2 price for 5,000 kcal/kg NAR domestic coal FOB Qinhuangdao basis was at Yuan 331.50/mt.
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