Chinese coal prices could rebound this year, according to a new market report from China Coal Resource. Prices for thermal coal could rise RMB30 – 45 per tonne this year, while metallurgical coal may climb by RMB45 – 60 per tonne.

“The anticipated turnaround is mainly due to reduced supply and potentially higher production costs as a result of the central and local governments’ efforts to cut excess capacity amid weak demand,” China Coal Resource said.

The State Council has announced plans to cut coal capacity by 1 billion t over the next five years, making RMB100 billion available to support coal and steel industry workers laid off as a result of these cuts and cuts to the country’s steelmaking capacity.

According to China Coal Resource, China produced 513.6 million t in January/February – a 6.4% y/y fall on the back of longer-than-expected production suspensions during the Lunar New Year holidays in February.

Rising prices could help boost China’s demand for imports, added China Coal Resource, which have dropped dramatically in recent years on the back of weakening demand for coal in the country.

Edited by Jonathan Rowland. Source: China Coal Resource.