Major Chinese coal miners will be able to temporarily adjust their coal output in either direction between September and December after an agreement with the China Coal Trade and Development Association, industry sources said Friday.
The sources had participated in the September 8 meeting of the National Development and Reform Commission, National Energy Administration, China Coal Mine Safety Administration and CCTDA.
Annual output of each coal miner will, however, will still need to be no higher than their mining capacity on a 276-workday basis.
"This will mean that Chinese coal miners will be able to up their coal output during certain periods, but then they will have to cut their output some other times," a Shanxi-based trader said.
Since May 2016, Chinese miners have been ordered to cut their coal output by about 16%, from a 330-workday basis to a 276-workday basis.
According to a copy of the agreement obtained by S&P Global Platts, coal miners who have entered into the agreement with CCTDA will adjust their output in line with CCTDA's guidelines. Those failing to abide by the agreement will be blacklisted, it added.
CCTDA will issue guidelines in accordance with the scheme, under which the price of domestic 5,500 kcal/kg NAR thermal coal, FOB northern China, based on the Bohai Sea coal price index, exceeds Yuan 450/mt and has been rising for two consecutive weeks, and combined coal stocks at the five major coal ports -- Qinhuangdao, Jingtang, Caofeidian, Tianjin and Huanghua -- fall below 12 million mt in a week, CCTDA will allow an increase in national coal output by 300,000 mt/day, which equates to about 9 million mt/month.
If the price of China's domestic 5,500 kcal/kg NAR thermal coal exceeds Yuan 470/mt and has been rising for two consecutive weeks, CCTDA will allow national coal output to increase by 400,000 mt/day, which equates to about 12 million mt/month.
If the price drops below Yuan 460/mt and has been down for two consecutive weeks, CCTDA will cancel the directive for output adjustment.
If the price exceeds Yuan 490/mt and has been rising for two consecutive weeks, CCTDA will allow coal production to increase by 500,000 mt/day, which equates to about 15 million mt/month. If the price of domestic 5,500 kcal/kg NAR thermal coal then drops below Yuan 480/mt and has been down for two consecutive weeks, CCTDA will cancel the directive.
If the price falls below Yuan 430/mt and has been down for two consecutive weeks, CCTDA will order a cut in output of 500,000 mt/day, which equates to about 15 million mt/month.
