The main factors driving the sustained rise in coal prices are reflected in the following aspects:
First, the concentration of the coal industry has further increased, and the growth rate of coal production has slowed down. This year, the coal industry has undergone comprehensive consolidation, with plans to close about 10,000 small coal mines. In the first half of the year, 9,075 coal mines of various types had actually been closed. The large-scale closure of small coal mines has, to a certain extent, curbed the excessively rapid growth of coal supply. According to statistics, from January to September, the national coal output was 1,676,741,500 tons, an increase of 11% compared with the same period last year. The average month-on-month growth rate has slowed down, with August's growth rate dropping by 4.5% compared with July, and September's growth rate increasing by only 1.2% compared with August.
Second, coal demand has grown rapidly. Since the beginning of this year, the economy and industrial production have continued to maintain a relatively fast growth momentum. From January to September, the national thermal power generation, cement output, steel output, and fertilizer output increased by 16.7%, 15%, 24%, and 13.8% year-on-year, respectively. These four items account for more than 80% of the total domestic coal demand, and their rapid output growth has significantly boosted the domestic coal market demand. In addition, due to seasonal factors, the coal market will enter the traditional consumption peak season in the fourth quarter, and coal demand will further increase, with the growth rate likely to expand somewhat.
Third, the reform of the paid-use system for coal resources has led to a significant increase in coal production costs. Since this year, in major coal-producing provinces and regions such as Shanxi and Inner Mongolia, China has carried out reforms to the paid-use system for coal resources, including raising the coal resource tax, increasing special safety production fees, establishing environmental treatment and restoration deposit funds, and setting up coal mine transition sustainable development funds. Incorporating the resource cost, environmental cost, safety cost, coal mine transition cost, and transportation cost of coal mining into the current cost of coal has, to a certain extent, increased the cost pressure on coal enterprises, thereby providing strong support for the high-level operation of coal prices. According to statistics, from January to October, the average production cost per ton of coal for key state-owned coal enterprises in Shanxi was 185.46 yuan, a year-on-year increase of 21.5%.
Fourth, relatively tight railway transport capacity has driven up coal prices. In the fourth quarter, the basic pattern in which tight railway transport capacity restricts coal supply is unlikely to undergo fundamental changes, especially in some provinces and regions such as Shanxi, Shaanxi, and Ningxia, which are constrained by tight railway transport capacity. This has, to a certain extent, pushed up coal prices in sales areas.
Fifth, the impact of rising coal prices on the international market. Affected by factors such as the sharp rise in international crude oil prices and the entry of countries in the Northern Hemisphere into the winter coal stocking season, the momentum for coal price increases in the international market will remain relatively strong in the coming months, which will, to a certain extent, support the rise of domestic coal prices.
