China’s thermal coal futures slumped for a sixth consecutive day on Monday to their lowest in more than a month. The decline came after the National Development and Reform Commission said it would clean up and rectify unlicensed storage sites, especially in major producing regions of Shanxi, Shaanxi, and Inner Mongolia. The NDRC said these illegal sites facilitate illegal traders to hoard coal which “seriously disrupts” the market. The state planner added that the three provinces are required to set up a system to report legal and compliant coal storage sites.
The thermal coal futures contract on the Zhengzhou Commodity Exchange dropped 10% in Wednesday’s day session. It extended the slump by another 13% in night trading to CNY1,033.8 ($161.76) per ton, its lowest since September 17. The contract has fallen by 47.8% from its record high of CNY1,982 ($310.12) per ton on October 19. Coking coal and coke futures also dropped 9% in the Wednesday day session before falling further 12% in the night trading.
The prices of coal-derived petrochemicals also edged down. Methanol and ethylene glycol settled down 9.03% and 7.25%, respectively, in Wednesday’s day trading. Meanwhile, urea fell 7.25%. Morgan Stanley projects China’s average thermal coal prices to decrease to CNY700 ($109.53) per ton in 2022 from CNY912 ($142.70) a ton in 2021.
