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China Qinhuangdao Coal Price Rebounds as Unsafe Mines Are Shut

China’s benchmark price for power-station coal rebounded from the lowest level in four years as the government sought to shut unsafe mines.

Spot coal with an energy value of 5,500 kilocalories per kilogram at the port of Qinhuangdao rose to a range of 530 yuan ($86.87) to 540 yuan a metric ton as of yesterday, according to data from the China Coal Transport and Distribution Association today. That’s the first weekly gain since Oct. 15 last year.

China, the world’s largest coal consumer, is pushing for small and mid-sized mines to be suspended to avoid fatal accidents as the nation convenes a high-profile Communist Party meeting in November. Key economic reforms may be announced at the Beijing plenary meeting of the Central Committee, which will be the third full gathering of the party leadership. More than 2,000 mines may be closed by 2015, according to a government statement on Oct. 12.

“Coal-mine construction in Shanxi, a key producing province, was suspended from Oct. 10 for safety checks, an apparent political move,” Helen Lau, an analyst at UOB-Kay Hian Ltd. in Hong Kong, said by phone today. “That’s something we may see more throughout next March.”

The northern province produced 913 million tons of coal in 2012, or 25 percent of the nation’s output, and the shutdown of mines may cut supplies by 70 million tons, Lau said in a research note on Oct. 17.

China’s coal-price recovery may be sustained through March next year at an average of about 540 yuan a ton, according to UOB Kay Hian.

Source: Bloomberg