Coal futures on the local Zhengzhou Commodity Exchange jumped by nearly 12 percent to close at the equivalent of $219 per ton on Monday, setting a new record, data from Bloomberg showed.
Heavy rain in recent days has led to nearly 2 million people being displaced in the northern Chinese province of Shanxi, which is the largest coal-producing area in the country. Around 60 coal mines out of a total of 682 mines in the province have closed due to the flooding.
The weather-related setbacks for Chinese coal production come at a time when the world’s second-largest economy is grappling with a shortage of coal supply and a power crisis, which threaten to slow economic growth.
Just last week, Chinese authorities ordered 72 coal mines in Inner Mongolia to boost production by almost 100 million tons amid an energy crunch that has seen factories shut down and prompted fears of a disruption to the global economy. China is now allowing coal mines to produce the dirtiest fossil fuel even if they have already hit their production quotas.
China is also said to have resorted to Australian coal once again to plug the supply hole gaping in its energy security. Last year, China imposed an unofficial ban on Australian coal imports amid a political spat between the two governments.
China is scrambling for energy supply ahead of the winter, with a global shortage of natural gas and coal that has led to record-high prices of the fuels in Asia. China has also reportedly ordered its state energy companies to secure supply “at all costs” despite the rallying prices of liquefied natural gas (LNG) and coal.