China’s thermal coal futures slumped to their lowest in more than a month on Wednesday, marking a sixth straight day of declines after the state planner said it would carry out “cleaning and repair” work at coal storage sites. The most-traded thermal coal contract on the Zhengzhou Commodity Exchange fell 10%, hitting its daily trading limit on Wednesday morning, and is down about 40% from a record high hit last week due to the coal supply shortage. Other commodity prices followed suit, trading mostly in the red on Wednesday morning. Coking coal and coking coal futures also hit their limits, down 9%, while liquefied petroleum gas fell 4.8%. Petrochemicals such as methanol and ethylene glycol fell 6.9% and 4.3%, respectively, while urea, which uses coal as a feedstock, fell 3.8%. China, the world’s largest producer and consumer of coal, has been grappling with a power crisis. Coal-fired power accounts for about 60% of the country’s total electricity generation, leading to power rationing for industry in many regions and hampering growth in the world’s second-largest economy. Beijing has taken a number of steps to boost coal and electricity supplies, including approving new coal mines and allowing power companies to raise prices for customers. In its latest move, China’s state planner said it would carry out “cleanup and rectification” work at coal storage sites in some coal-producing regions and ban unapproved storage sites in its latest move to tackle soaring coal prices. The National Development and Reform Commission (NDRC) said in a statement late Tuesday that there were many unapproved coal storage sites around mines in the major producing regions of Shanxi, Shaanxi and Inner Mongolia, “making it convenient for illegal traders to hoard coal” and “severely disrupting” market operations. In addition to stepping up investigations and strengthening supervision, the three regions should also establish a reporting system for legal and compliant coal storage sites and ban those without approvals, the NDRC said. They should also crack down on illegal profit-making activities such as hoarding and raising coal prices using illegal coal storage sites, the statement said. In an effort to ease the supply crunch, China has encouraged coal miners to boost output and increased imports so power plants can rebuild inventories ahead of the winter heating season, but analysts say the shortage is likely to persist for at least a few more months. Average coal prices for next year are expected to fall to 700 yuan from 912 yuan in 2021, Morgan Stanley said in a research note to clients on Tuesday. “We highlight the risk of disappointing average selling prices for coal miners on the back of government intervention,” it said. “In the near term, we see policy measures stepping up incentives for producers to push coal output higher for the peak winter season,” it added, noting that moderate demand would further narrow the supply-demand gap. Profits at China’s industrial firms rose at a faster pace in September despite soaring prices and supply constraints, mainly due to stellar growth in the mining and raw materials industries, although profits for power companies were squeezed as they struggled to shed high coal costs. Here’s the story on “China Coal Slumps as Government Cleans Up Illegal Sites” from GICTrade. Also read articles and information about other commodities and forex in the GIC Journal. Follow and also get GICT bonuses from Friday blessings and 100% deposit bonuses.