Chinese coal miner China Shenhua Energy Company, a listed subsidiary of Shenhua Group - the largest coal company in China, has issued its annual contract price and monthly contract price for its coal, respectively at RMB 557/mt ($87/mt), remaining stable month on month and declining by RMB 1/mt ($0.16/mt) year on year, and at RMB 625/mt ($97/mt), increasing by RMB 31/mt ($5/mt) month on month and rising by RMB 55/mt ($8.6/mt) year on year. The new monthly contract price is much higher than what market players expected.
Starting from mid-April, coal prices in China have been rising continuously, while China’s National Development and Reform Commission (NDRC) has issued several measures to curb the rising trend. For instance, on May 21, the NDRC required the major coal producers, China Shenhua Energy Company and China Coal Energy Company, to lower their monthly contract prices for 5,500 kcal/kg thermal coal to less than RMB 570/mt ($89/mt) before June 10. On May 24, China Coal Energy Company concluded a spot transaction to supply 5,500 kcal/kg thermal coal to China Huaneng Group Co. at RMB 570/mt ($89/mt).
However, China Shenhua Energy Company’s new price hike reflects the strong upward momentum in the coal market as the peak season for coal consumption will come in mid-June. Demand for coal will increase steadily and so other coal producers will likely also increase their prices.