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China domestic thermal coal prices likely to rise post-mine explosion: sources

Chinese domestic thermal coal prices are likely to get a boost in the near term, following reports of an explosion at a coal mine in Shanxi province, stoking fears of stringent mine safety checks and likely stress on cargo availability, sources said Tuesday.

A gas explosion inside a coal mine in Shanxi province’s Pingyao County in China killed and injured several people, sources said, citing media reports.

China has been implementing mine safety measures since last year across the country following a spate of accidents and closing several small mines to boost efficiency as well as battle pollution levels.

An Indonesia-based trader currently in Shanghai said the Chinese government might introduce more stringent mine supervision and the production rate in Shanxi province may decline.

The accident will put Qinhuangdao prices on an uptrend, traders said.

“Safety inspection is a must and pit production will be reduced,” said a south China-based trader.

Availability of domestic coal may be affected at a time when China is poised for a higher rate of coal burn, especially in the northern area as winter kicks in, an Indonesia-based producer said.

Offers for Qinhuangdao 5,000 kcal/kg NAR coal prices have inched up Yuan 3-5/mt since Monday, according to S&P Global Platts data.

Some international traders adopted a wait-and-watch stance as they seek clarity on actions from local authorities.

However, a Thailand-based trader expressed doubt over whether any rise in Chinese domestic prices could be sustainable.

“Import bans on seaborne thermal coal have already led to excess supply of Chinese domestic materials,” he said.

Chinese domestic coal prices and futures remained largely unchanged after the mine accident in Shanxi due to persistently weak demand for Chinese domestic coal, several Chinese traders said.

“The authorities have given attention to the accident due to the casualties involved,” a Singapore-based trader said. “It was said that mines in Shanxi will be closed for one week.”

December futures prices on the Zhengzhou Commodities Exchange were stable week on week at Yuan 557/mt, sources said.
Source: Platts

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