BEIJING (Reuters) - China’s Datang Corp has 28 days of coal stocks for its power plants, enough for winter consumption, the company’s general manager told Reuters on Monday, brushing off concerns that utilities could not secure coal supplies for winter.
That amount of supply is higher than China’s five major utilities were storing at this time last year. Reuters reported in November 2016 that companies were holding less than 20 days of inventories.
Overall Datang has abundant coal supplies but power plants in the three northeastern provinces of Heilongjiang, Liaoning and Jilin still face some tightness, General Manager Chen Feihu said in a email reply to Reuters during a question and answer session as part of China’s 19th Communist Party Congress.
“We have started scooping up coal for the winter period at a earlier date compared with last year especially for the northeastern regions. We will book more supplies on long-term contracts this year,” Chen said.
Some power plants in Heilongjiang province issued a plea in September to China’s National Development and Reform Commission, the country’s economic planner, asking for help with securing coal supplies.
His comments will allay concerns about a potential squeeze in supplies and another prolonged rally in prices, but they also illustrate how last year’s winter market chaos has upended the way utilities do business.
Last winter, tight supplies caused by government-enforced mining cuts triggered a price rally.
Located in the far northeast of China, Heilongjiang and Jilin are two of five provinces where Datang has started providing heating, along with Xinjiang, Gansu in the west and Shanxi in central China, Chen said.
Chen said Datang will build a large-size coal reserve center in Heilongjiang, to help safeguard coal supplies for the area, without giving the amount of capacity.
In Jilin province, Chen said Datang has invested 40 million yuan ($6 million) to expand their coal inventory capacity to 1.6 million tonnes from 700,000 tonnes.
Datang holds 2 million tonnes of coal inventories in Heilongjiang and Jilin province, said Chen.
Chen expects coal prices to return to a reasonable range as the government looks to increase coal mining capacity from mines with more advanced production technology.
Thermal coal futures on the Zhengzhou Commodity exchange have surged more than 50 percent this year to 629 yuan ($94.84) per tonne as of Monday.
In an interview with Reuters on Friday, Ling Wen, the General Manager of China Shenhua Group, China’s biggest coal producer, said that thermal coal prices at 550 yuan ($82.93) per tonne are reasonable for both coal producers and power plants.
Reporting by Meng Meng and Josephine Mason; Editing by Christian Schmollinger