China’s push for cheaper coal is spurred by weather and trains

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(Bloomberg) – Beijing’s desire to lower coal prices to ease pressure on economic growth is being given a timely boost by the country’s railroad and warmer, wetter weather.

The Daqin railway line that transports coal to the key port of Qinhuangdao has delayed the start of its 10-day annual maintenance period until April 18, giving power plants more time to replenish after the winter, said China Coal Transportation and Distribution Association in a report. on Sunday. Meanwhile, the China National Railway Group will open 54 new coal-fired railway routes from April 8, Fengkuang Coal Logistics said in a research note on Monday.

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At the same time, the weather is warming up as the rainy season starts early. This reduces the heating demand and increases the production of hydroelectricity. The combination of factors is expected to limit coal consumption and lower prices over the coming week, according to Fengkuang.

Chinese leaders are keen for this to happen. Beijing has taken extraordinary steps to try to secure the supply of coal at reasonable prices after shortages last year forced the country to cut power to factories and sky-high costs hurt utility results public. The government has ordered a massive increase in mining and plans to impose a price range of 570 to 770 yuan per ton for medium- and long-term coal supplies from May 1.

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The country’s benchmark coal futures are still above that level, although they fell slightly on Tuesday to around 840 yuan a ton.

Events today

BYD Co., Kunlun Energy, Datang Power

Today’s chart

The shutdowns in Shanghai and Shenzhen will likely deal the biggest blow to China’s economy since the nationwide lockdown in early 2020 – and could jeopardize the country’s growth target, according to Bloomberg Economics. The damage could go deeper than that because Shanghai is such an important node in global supply chains.

Share of GDP of major cities

On the wire

Oil demand in China is suffering from a fresh wave of high-profile virus crackdowns, with a staggered eight-day lockdown covering its main financial center weighing on consumption from the world’s biggest importer.

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The week ahead

Wednesday March 30

PROFITS: Cnooc (earnings call 6:00 p.m.), Cosco Shipping, Yankuang Energy, Ganfeng Lithium, Datang Renewable, Angang Steel, Longyuan Power

Thursday, March 31st

Official China PMI for March, 9:30 a.m. EARNINGS: PetroChina (5:00 p.m. earnings call), SyngentaUSDA Weekly Crop Export Sales, 8:30 a.m. EST

friday april 1st

Chinese Caixin Plant PMI for March, 9:45 a.m. China Iron Ore Port Weekly InventoriesShanghai Stock Exchange Weekly Commodity Inventory, ~3:30 p.m.

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