Coal news and updates

Early start to China's winter heating season bullish for gas, coal demand

Northern China is seeing an early start to the winter heating season due to falling temperatures, which will boost demand for coal, natural gas and electricity sooner-than-expected and is bullish for fuel prices at a time when global supply remains tight, according to market participants and traders.

Eight provinces and regions in northwest and northeast China, comprising Inner Mongolia, Heilongjiang, Xinjiang, Gansu, Qinghai, Jilin, Shaanxi and Shanxi, have started centralized heating earlier than previous years due to a cold wave, with some cities providing heating 10-15 days earlier than scheduled, according to reports by state-owned media CCTV through the week ended Oct. 17.

The heating season in China normally lasts from Nov. 15 to March 15 in the north, where cold weather is most extreme, but local governments can decide when heating services begin based on local weather conditions.

Temperatures have dropped sharply in many parts of northeast and northwest China, state media said. In Heilongjiang, all heating systems have been opened, and heating companies in Harbin city began supplying heat 4 days earlier than normal, Yulin in Shaanxi province is 10 days ahead of schedule, and Datong in Shanxi province started 13 days earlier than previous years.

China's Central Meteorological Observatory issued a cold wave "blue" warning at 10 am local time on Oct. 15, followed by the China Meteorological Administration initiating a "level four" emergency response, the lowest on a scale of 1 to 4, to the cold wave at 11 am on the same day, according to notices.

According to CMO's forecast, the temperatures in some northern, northeast and eastern regions were expected to drop by 12-14 degrees Celsius from Oct. 15-18 onwards, and temperatures in the northwest started dropping even earlier. Beijing city also experienced a cold wave over the weekend.

According to Beijing's heating regulations, if the temperature is lower than 5 degrees Celsius for 5 consecutive days, heating can be started in advance, CCTV's report said Oct. 14. Hulunbuir city in Inner Mongolia, one of the country's coldest regions, saw heavy snowfall over the weekend, with temperatures plummeting to minus 15 degrees Celsius, CCTV said Oct. 17.

Centralized heating mainly comprises the use of fossil fuels to heat homes through a network of insulated pipelines that transport steam. Authorities have been preparing winter fuel stockpiles through supply and demand measures for months, and most recently pipeline gas was being diverted to the northern regions, market sources said.

Supply of pipeline gas in southern China was reduced by around 10% recently, including gas via arterial gas pipelines --- the China-Central Asia, West-East and Sichuan-East pipelines -- to boost supplies to the north, a few local gas distributors said over the Oct. 16-17 weekend.

"The cut in pipeline gas delivery volume is mainly within the tolerance level of 10% built into the contract," a source in Shenzhen said.