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The energy crisis amid a coal shortage in China has worsened because of colder weather in recent days, sending the key local coal futures contract to a new record high on Tuesday.
The most actively traded contract on the Zhengzhou Commodity Exchange rose jumped by 6 percent today to exceed the equivalent of $302 per ton, Bloomberg reports.
China’s coal prices and coal futures have rallied since last month amid a shortage of the fuel in the world’s second-largest economy, which has led to power cuts in most Chinese regions.
As per data collected by Bloomberg, coal futures closed at record highs at each of the past six trading sessions and have soared by more than one-third since the end of September.
Year to date, coal futures have surged by over 260 percent, according to Reuters estimates.
Coal supply in China continues to be very tight with roaring power demand, flat domestic production, and a spat with major coal exporter Australia that has seen Chinese authorities impose an unofficial ban on imports.
Earlier this month, reports emerged that China is so desperate for coal amid the power crunch threatening its economic growth that it had released Australian coal sitting in bonded storage not cleared by customs because of the spat between the two countries.
Surging coal prices and power shortages in China slowed the growth of the world’s second-largest economy in the third quarter. It now threatens to spill over to the global supply chains in the fourth quarter.
The power cuts and the subdued property investment after the Evergrande debacle resulted in weaker-than-expected economic growth in China in the third quarter. Gross domestic product (GDP) rose by 4.9 percent in Q3 compared to the same quarter last year, below the 5.2-percent growth expected by analysts in a Reuters poll.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.