The Chinese government may reinstate curbs on coal mining lifted last fall, with producers calling for new limits on output amid fears of a coming plunge in prices.
Executives from 19 leading coal companies, among them Shenhua Group, gathered Tuesday for talks at which they agreed to work to prevent a sharp price reversal in thermal coal, which could come in March or April, after the winter heating season ends.
Thermal coal prices turned upward after the Chinese government early last year set a goal of cutting 250 million tons of annual production capacity and imposed the operating limit. Bigger-than-expected capacity reductions of 290 million tons tightened supply more than the market had bargained for, sending the price to a peak of more than 600 yuan ($87) per ton, 60% higher than at the start of 2016.
In response, the Chinese government lifted the operating curbs and told coal producers to raise output. The tightness in supply has since eased, and coal has been fetching around 590 yuan per ton recently.