Coal prices at China’s Qinhuangdao port, a benchmark in the world’s biggest producer and user of the fuel, rose to the highest in a year as snowfalls restricted supply and mine accidents raised speculation of closures.

The price of coal with an energy value of 5,500 kilocalories a kilogram
gained 3.1 percent to between 660 yuan ($97) and 680 yuan a metric ton
in the week ended Nov. 23 compared with assessments in the previous
week, according to data from the China Coal Transport and Distribution
Association. Prices were at 710 yuan in the week ended Nov. 17 last
year.

Northern provinces were hit by the heaviest snowfall in six decades two
weeks ago, killing 32 people and causing 6.96 billion yuan ($1 billion)
in damage, the Ministry of Civil Affairs said. Snowstorms trapped
thousands on frozen highways and affected fuel deliveries.

The price gains are “related to temporary factors including the snow
disruptions to production and the transport of coal,” Yu Yingxi, a
commodities analyst with Barclays Capital, said by telephone from
Singapore.

China’s government on Nov. 16 ordered power plants to increase their
coal inventories to ensure adequate fuel supplies after the transport
disruptions. China’s 27 million tons of coal stocks can meet the rise
in demand because of snow, Xinhua News Agency said on Nov. 18, citing
State Grid Corp. of China.

China’s worst coal-mine disaster in almost two years on Nov. 21 killed
104 workers and may spur the government to order a second nationwide
safety check in three months that could close mines and tighten supply.
Four miners are still trapped underground at the state-owned Xinxing
mine in Heilongjiang, Xinhua said yesterday.

The recent mine accidents “definitely have an impact on sentiment in
the market,” Yu said. “They are a reminder of how vulnerable supply
is.”

A second accident that occurred on Nov. 22 at a mine in Hunan province
killed 11, with 3 workers still missing, Xinhua also said yesterday,
citing a local government official.

Source: Bloomberg

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