A spate of deadly coal mining accidents to start the year is raising the specter of output-dampening safety checks in China just as global supply is tightening.
Authorities in the coal hub of Yulin this week ordered a mine to be shut after discovering its license had expired and found safety hazards on-site, according to a notice from the city’s energy bureau posted on WeChat by industry publication Thermal Coal Today. Yulin is the center of mining activity in Shaanxi province, China’s third-biggest producing region.
The shutdown follows an escalation of deadly accidents to start this year after the government pressured mines to boost output to stave off an energy shortage. Twenty-nine miners died in accidents in January and February, nearly double the total from the same period last year, China’s National Mine Safety Administration said in a report this week. Fourteen died in one accident alone after a roof collapse in Guizhou province.
Coal mine safety has been in the spotlight recently as the Communist Party, which celebrated its centenary last year, burnishes its credentials as the protector of blue-collar workers. A crackdown on unsafe mining practices and harsher penalties last year were in part blamed for a reduction in mine output that led to shortages that caused widespread power curtailments in September and October.
If authorities launch more safety inspections, it could slow domestic production growth at the same time imports have fallen as global prices hit records amid supply scarcity. Buyers are avoiding cargoes from Russia, the third-biggest exporter, after its invasion of Ukraine, and top shipper Indonesia may have to curtail foreign shipments again this year in order to secure domestic supplies.
All that will challenge Beijing’s focus on energy security, reiterated during the opening of its National Party Congress last weekend, as leaders seek to avoid any shortages and buffer the economy from global commodity fluctuations to keep inflation in check. Leaders may have to choose what’s their top priority: safety or security.
Today’s Events
Wednesday, March 9
- National People’s Congress continues in Beijing
- China’s aggregate financing & money supply for Feb. due from today
- China farm ministry’s monthly crop supply-demand report (CASDE)
- USDA’s monthly world crop supply-demand report (WASDE), 12:00 EST
Today’s Chart
Surging global oil and gas prices due to the Russian invasion of Ukraine are adding to inflation risks in China as factory costs remain elevated. The producer price index rose 8.8% in February from a year earlier, official data showed, down from 9.1% in January. The recent spike in global energy prices is putting renewed pressure on Chinese manufacturers, threatening to push up costs again, squeeze profits, and slow economic growth further.
On The Wire
China is on course to miss its economic growth target by 1 percentage point this year as higher oil prices weigh on the world’s second-largest economy, Goldman Sachs Group Inc. said.
- Chinese Tycoon Behind Big Nickel Short Faces Billions in Losses
- Firms With Links to China Nickel Producer Tsingshan Fall Sharply
- China Developers Risk Losing Key Alternative Fundraising Source
- China Considers Buying Stakes in Russian Energy, Commodity Firms
- China Metal Stocks Drop After Report on Likely Russia Investment
- Sinopec Bonds Spreads Widen as Potential Russia M&A Is Weighed
- China’s Fiscal Aid Is Little Comfort for Cash-Strapped Provinces
- Why China Won’t Help Russia Around Sanctions: Shuli Ren
The Week Ahead
Thursday, March 10
- National People’s Congress continues in Beijing
- USDA weekly crop export sales, 08:30 EST
Friday, March 11
- National People’s Congress in Beijing ends
- China weekly iron ore port stockpiles
- Shanghai exchange weekly commodities inventory, ~15:30
