China has called on its top producing province to guarantee thermal coal supplies to some of the industrial hubs on the coast threatened by power shortages.
Miners in Shanxi have been asked to prioritize supply of as much as 47.7 million tons to seven provinces between May and December, according to the Chinese news portal Coal Vision, which cited a government plan. The miners will be allowed to sell the coal above existing price caps. The southern economic powerhouse of Guangdong is in line for almost 40% of the amount.
Other regions to be prioritized include the industrial heartlands of Jiangsu, Zhejiang and Fujian. The move is designed to avoid any repeat of the power crunch that struck in the fall, as markets on the coast stress over dwindling imports and a resurgent virus that’s clogging up transport of the nation’s mainstay fuel from the interior. Liaoning, Hainan and Guangxi are the other provinces deemed at risk.
The authorities in Shanxi will allow the coal to trade at a maximum price of 1.5 times the central government’s price band of 570 to 770 yuan a ton, according to the plan. Local miners have until Wednesday to sign the long-term contracts and report the deals to the local bourse, the Taiyuan Coal Trading Center. The province will then require companies to report progress on their deliveries every month.
The Shanxi government didn’t respond to requests seeking comment. In the first quarter, the province’s output rose 10% on year to 314 million tons. That was almost 30% of the national total.
China has raised output to record levels to prevent shortages, as well as setting price limits to control inflation. But mobility and transport restrictions as a result of the government’s Covid Zero policies have complicated the effort. The Shanxi government said last week it would do its best to remove those hurdles to supply.
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