The Chinese central government's efforts to raise domestic coal output are facing further bureaucratic setbacks even as a nationwide "super cold snap" threatens to significantly raise heating demand.
China's meteorological administration yesterday issued a code orange warning for what it described as a "super cold snap" across the country that could lower temperatures in some regions by as much as 16°C as the country moves into 2021. Most of China will experience temperatures as low as 0°C or less while temperatures in many parts of north China could dip below -20°C, the administration said. China uses a four-tier color code weather warning system, with red indicating the most serious situation, followed by orange, yellow and blue.
But the urgency to increase coal stockpiles is not shared across all government departments. Operations at a coal mine with a production capacity of 15mn t/yr have been suspended in the third largest coal-producing heartland Shaanxi, after it was alleged to have breached safety protocols, according to the national energy administration (NEA). A series of high profile mining-related accidents involving fatalities have shone the spotlight on safety issues and put renewed pressure on the authorities to step up safety inspections.
Inner Mongolia, the second largest coal producing province, will not approve any new coal mines, according to the local branch of the NEA that cited environmental considerations. This illustrates the bureaucratic obstacles to achieving a consensus across multiple government departments with different priorities.
NDRC considers fresh imports
China's main economic planning agency the NDRC said yesterday it would consider allowing increased imports of coal and LNG to satisfy heating demand. It is unclear whether LNG can sufficiently substitute for thermal coal given the magnitude of China's heating demand and its higher cost in many regions.
China has had to ration electricity in many parts of the country given acute coal shortages because domestic output has been insufficient to compensate for steep import cuts since April. China's imports of all types of coal for January-November stood at 265mn t, a sharp decline of 10.8pc on the year. Domestic output of all coal for the same period stood at 3.48bn t, a marginal increase of 0.4pc on the year, according to data from the national bureau of statistics.
China's informal restrictions were mostly targeted at Australian coal since April after Canberra called for an investigation into the origins of Covid-19. The shortages created by the import curbs have been exacerbated by a steady recovery from the pandemic that raised industrial demand for electricity.
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