China thermal coal futures set for biggest monthly rise in 3 years

SHANGHAI: China's thermal coal futures prices are set for their biggest monthly gain in nearly three years due to cold winter weather that is forecast to stretch into 2021.

Zhengzhou Commodity Exchange thermal coal futures are up nearly 12% this month and on course for their biggest monthly gain since January 2018.

Prices hit a record 730 yuan ($111.77) per tonne last week, but have since eased and were last down 1.2% at 663.80 yuan per tonne on Wednesday.

The Bohai-Rim Steam-Coal price index, China's benchmark power coal price index which measures prices at northern China's major ports, is also at its highest in at least two years, hitting 585 yuan per tonne on Wednesday, the index website showed.

Harsh winter weather alongside China's fast-recovering manufacturing sector have boosted power consumption this year, leaving coal supplies tight despite record domestic output in November.

Ongoing colder-than-usual temperatures throughout north Asia could underpin thermal coal demand.

"A new 'cold wave' is sweeping across the country. Due to a sharp drop in temperatures and rain and snow, heating demand will significantly increase," CITIC Futures said in a report.

Temperatures in North Asia, including China, are expected to fall below average in early January, according to Refinitiv forecasts.

China's central economic planner on Monday called on companies to increase spot imports of liquefied natural gas (LNG) and thermal coal to ensure energy supplies ahead of the expected cold spell.

The country's LNG imports, which already hit a record in November, are expected to chart new highs in December, contributing to gains in Asian spot prices which rose to a six-year peak this week.