China, the world’s biggest producer and consumer of coal, is considering reinstating output restrictions to avoid the return of a glut after easing limits during winter.
Shares in the country’s coal miners jumped along with futures prices amid market speculation.
The National Development and Reform Commission may resume mining curbs that cap output to an equivalent of 276 days of capacity after heating season ends in mid-March, according to sources.
The NDRC, the nation’s top planner, didn’t respond to a faxed request for comment and nobody answered calls to its press office on Wednesday.
Mining restrictions last year by President Xi Jinping’s government aimed at easing a glut resulted in a 9.4 per cent drop in production and a surge in prices, snapping at least four years of declines across Asia. To cool the market, officials reversed some measures to boost production ahead of winter. A resumption of restrictions now may support prices again if demand growth is sustained, according to Argonaut Securities (Asia) Ltd.
Helen Lau, a Hong Kong-based analyst at Argonaut, said: “The policy will effectively set a floor for coal prices.
“Reinforcing the 276-working-day restriction, even partially, will have an immediate impact to supply recovery and market sentiment.”
The NDRC is considering reinstating the production limits for 6 months, with some mines and areas possibly excluded, according to reports but no decision had been made yet.
China Shenhua Energy Co., the country’s largest coal producer, advanced 3.1 percent to HK$16.72 at the close in Hong Kong. China Coal Energy Ltd., the nation’s second-biggest producer, climbed 3.7 percent to HK$4.25. The shares of both companies rose to their highest since Nov. 14. The benchmark Hang Seng index advanced 1.2 percent.