Chinese and international benchmark coal prices have surged to multi-month highs due to increased thermal coal power generation in China. Domestic production fell as the government addressed excess capacity and oversupply in key industries. Prices at Qinhuangdao port hit a year high, rising 37% from July lows.

Higher Chinese prices led to increased prices for Indonesian and Australian thermal coal benchmarks, reaching six-month and 11-month highs. Surging Chinese demand for power generation and reduced domestic production were key factors. China’s coal production dropped by 2.3% in October, but output for the year remained 1.5% above last year.

Power generation in China spiked in October, with the highest electricity output for any October since 1998. Thermal power output rose by 7.3% due to increased coal usage, while wind and solar power saw curtailments. Unusual weather patterns contributed to the surge in electricity demand.

Coal demand is expected to remain high during the winter months as China continues to rely on thermal power to meet its energy needs. The surge in power generation in October was driven by a heatwave in the south and colder temperatures in the north, leading to increased use of air conditioners for heating.

Read more at Yahoo Finance: China’s Soaring Coal Demand Fuels Global Price Surge