China will be forced to buy Australian Thermal Coal China orders...

China will be forced to buy Australian Thermal Coal

China orders top energy firms to secure supplies at all cost

China’s central government officials ordered the country’s top state-owned energy companies – from coal to electricity and oil – to secure supplies for this winter at all costs, according to people familiar with the matter.

The order came directly from Vice-Premier Han Zheng, who supervises the nation’s energy sector and industrial production, and was delivered during an emergency meeting earlier this week with officials from Beijing’s state-owned assets regulator and economic planning agency, the people said. Blackouts won’t be tolerated, the people said.

Chinese coal futures earlier surged to a record as the country grapples with shortages of the fuel ahead of a week-long holiday. Prices have more than doubled th
is year amid soaring electricity demand from factories and slow output growth from mines.
The emergency meeting underscores the critical situation in China. A severe energy crisis has gripped the country, and several regions have had to curtail power to the industrial sector, while some residential areas have even faced sudden blackouts.

China’s power crunch is unleashing turmoil in the global commodities markets, fuelling rallies in everything from fertiliser to silicon.

Volatility in the energy markets is poised to intensify on the order from the central government, said Bjarne Schieldrop, chief commodities analyst at SEB.
China’s statement “to me implies that we are in no way on a verge of a cool-off. Rather it looks like it is going to get even more crazy,” he said. “They will bid whatever it takes to win a bidding war for a cargo of coal” or liquefied natural gas.

In a sign of how worried Chinese officials are, Premier Li Keqiang has vowed that every effort will be taken to maintain economic growth. China will ensure the needs of basic livelihoods are met and will keep industrial and supply chains stable, Mr Li was cited as saying by China National radio during a meeting with foreign diplomats on Thursday.

China’s move “brings security of supply back on the forefront,” said Leslie Palti-Guzman, president of New York-based consultancy Gas Vista “This is bad news for European governments and consumers who will deal with elevated gas and electricity prices for the rest of the winter” as they compete with China for supply.

Bloomberg