Coal prices in China, the world’s largest producer and consumer of coal, are resuming their climb as coal-fired plants renew their depleted reserves. The anticipated higher summer demand may push coal usage upward and exchange traded funds (ETFs) may move right along with it.
In anticipation of the peak summer demand, users have begun to build up stockpiles, sending coal prices higher in some parts of the world, reports Baizhen Chua for BusinessWeek. [3 Reasons to Have Coal ETFs on Your Radar.]
A six-month-long drought in southwest China cut hydropower generation and upped demand for coal-fired plants, prompting China to start building up reserves again. One X factor, though, could be China’s cooling demand for steel, which has analysts wondering if it’s a sign of a slowing market or just a temporary step back. [4 Factors Driving Coal and Steel ETFs.]
Between March 19 and April 30, inventories at Qinhuangdao, the country’s largest port for coal, plunged 44%. The eastern province of Shandong has also ordered plants to increase stockpiles to 30 days of consumption from 15 days before summer.