20 February 2019

Coal plays fly high on price rebound

Coal plays surged on Thursday afternoon following a rebound in coal prices after a prolonged decline.

China Shenhua Energy (01088.HK), Yanzhou Coal Mining (01171.HK) and China Coal Energy (01898.HK) all rose nearly 5 percent.

Mongolia Energy Corp. (00276.HK) had the best performance in the sector, soaring more than 9 percent at one point.

Bohai Rim Steam Coal Price Index rose 1 yuan to 531 yuan (US$87.06) per ton from the previous day, the first time for the gauge to post an increase since November last year, according to China Securities Journal.

But is the coal price rebound a lasting trend or just a flash in the pan?

According to the newspaper report, Daqin Railway, a key coal transport line to Qinwangdao port, has been undergoing maintenance since last Wednesday. As a result of the suspension of railway operation, inventories at the major coal terminal have been declining, and this is believed to be the key factor driving up the coal price.

But coal demand is expected to stay weak until the end of the year, and a sustained price rebound is therefore unlikely.

– Contact the writer at [email protected]



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