OFFERS for physical cargoes of thermal coal in China skyrocketed this week after reports of power outages and supply disruptions.

Selling indications for so-called 5,500 NAR coal were pegged at above 2,000 yuan (US$310) a ton Monday, according to traders. That compares with 1,600 to 1,700 yuan a ton before the nation’s National Day holiday that ended last Thursday, they said.

The physical coal market in China is seeing higher prices than the nation’s futures market, where the most-active contract on the Zhengzhou Commodities Exchange surged 7.1 percent yesterday to 1,507.8 yuan a ton, after jumping 12 percent Monday.

Some mining regions across the country are being hit by flooding, complicating efforts to boost supply and halt an escalating energy crisis.

Two mines in Shaanxi Province have been impacted by heavy rainfall, the Securities Times reported, adding to issues in neighboring Shanxi, the country’s biggest coal-producing region. Floods closed 60 of the 682 coal mines in Shanxi in recent days, though some sites are now slowly resuming operations.

Ensuring coal supply has become a top priority for the government even as China plans for a carbon-neutral future.

Premier Li Keqiang stressed the importance of energy security to China’s continued development in a speech released Monday night, in which he reiterated the country’s plans to keep investing in coal, at least in the near term.

Coal’s standing in China’s energy picture is hard to overstate. Coal accounts for 64 percent of the nation’s power generation. Prices have soared this year as mine output failed to keep up with surging demand, depleting inventories. (SD-Agencies)