Nation plans more efforts to better guarantee power supply

China's tight energy supply situation will gradually ease this winter and next spring following the government's intensified efforts to boost coal supplies and cool skyrocketing prices amid a power crunch in some parts of the nation, industry experts said.

They said government measures will help to gradually bring the coal market back to rational operations and ensure stable coal supplies and prices this heating season.

The National Development and Reform Commission, the nation's top economic regulator, on Monday said the recent daily coal output has reached 11.93 million metric tons, the highest in recent years.

The NDRC said average daily coal production reached 11.66 million tons from Nov 1 to 5, up over 1.2 million tons from the end of September. On Saturday, coal stockpiles at the country's major power plants hit 117 million tons, up over 40 million tons from the end of September.

The NDRC noted the prices of both thermal coal products and futures have dropped significantly with the increase in coal supplies and rising stockpiles at power plants and ports.

The most-traded thermal coal contract on the Zhengzhou Commodity Exchange closed over 3 percent down at 916.2 yuan ($143.2) a ton on Monday, versus the record high of 1,982 yuan on Oct 19.

Looking ahead, the NDRC expected coal prices will continue to decline steadily as the nation will further release coal production capacity and give full play to medium- and long-term coal contracts to stabilize the market.

State Grid Corp of China, the largest power provider in the country, said on Sunday the power supply and demand in areas operated by the company have returned to normal. The thermal coal inventory in the company's operating areas has rebounded to 99.32 million tons, while the available days of consumption has risen to 20, it said.

The scale of power curbs and the electricity gap were significantly reduced, while the power supply to some factories with high energy consumption and high pollution in certain provinces was still being limited as of Saturday.

The company vowed to further stabilize power supplies by tapping the potential of all kinds of resources, while coordinating power transmission across different regions to ensure the safety of the grid. The backdrop to that is the domestic grid will encounter an overall tight balance of power with gaps in some areas due to power-consumption peak and the drought season for hydropower in the country.

Yang Jinghao, chief economist of Kangkai Data Technology, said the government measures to boost supplies and contain rising prices will help ensure power generation and residential heating as well as ease the pressure on rising costs for industrial enterprises.

Wang Chikun, an independent economist, said the recent rally in coal prices was the result of multiple factors like the rise in commodity prices, insufficient coal inventories and production, rising coal demand, economic recovery, and hoarding in the market.

Wang expected to see a continuous increase in coal production, saying prices will gradually return to a reasonable range in the future.