(Yicai Global) Nov. 1 -- China’s coal inventories have jumped 35 percent since the end of last month as the government exhorts its coal miners to hike production amid a global shortage of the fossil fuel that is leading to record-high prices and affecting the country’s electricity output. As a result, prices have come down significantly.

Coal stockpiles at China’s power plants have jumped to 106 million tons, enough for 19 days of electricity generation, the country’s top economic planner said yesterday. In the three coldest northeastern provinces, inventories have doubled to 12.7 million tons, enough for a month’s use.

Coal mines are now producing around 11.5 million tons of the black gold a day, 10 percent more than at the end of September, the National Development and Reform Commission said. At one point output was 11.72 million tons, the highest daily record in recent years. Inventory at Qinhuangdao port, a major coal distribution hub, has reached five million tons.

The extra supply has helped to push down prices. The price of thermal coal has dropped by as much as 45 percent in the past week to CNY1,200 (USD187) per ton at the pit head, or coal mine gates, and to CNY1,500 per ton at ports. The most active futures contracts for thermal coal fell a further 8.2 percent this morning to CNY936 per ton. In the past nine trading days the price has more than halved.

The NDRC said on Oct. 19 that it will intervene to implement specific measures to push coal prices back into a “reasonable range.” Soaring prices and fixed tariffs had meant that almost all coal-fired power generation was operating at a loss. In order to reduce the burden on electricity suppliers, the government also lifted the floating upper range of the base tariff to 20 percent from 10 percent on Oct. 15.

Editor: Kim Taylor