China's coal industry is entering its peak season for consumption but the market still saw dropping coal prices due to overcapacity, said Wang Xiaolin, deputy head with the National Energy Administration (NEA).
Some of the downstream power plants bought in coal at large discounts and then sold surplus coal to other users at possibly higher prices, according to Deng Shun, a coal analyst with ICIS, noting that this is behind the oversupply of the market.
The sluggish market has forced large coal enterprises such as Shenhua, China National Coal Group, Datong Coal Mine and Yitai Coal to cut coal prices in October, said Deng.
The maintenance of Datong-Qinhuangdao railway and coal storages for coming winter fail to ignite the coal market and the market still awaits the improvement of macro-economy as well as serious implementation of production-cut consensus by coal producers, according to Wind Info.
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