UOB-Kay Hian Limited said that China’s thermal coal prices face upward pressure, and may rebound earlier than expected after stockpiles at power stations declined.

China’s thermal coal prices typically fall during July to September after power plants complete stockpiling to meet summer demand.

Inventories at the top six Chinese power generation companies have fallen to the equivalent of 15 days of consumption, after staying above 17 days since June, said Helen Lau, a Hong Kong-based analyst at UOB-Kay Hian. She said that inventories below 15 days represent supply tightness.

Daily coal consumption at power plants rose to a record in July as electricity demand expanded 12 per cent from the equivalent period last year, according to Cai Hongyu, a Hong Kong-based analyst at China International Capital Corp, China’s largest investment bank. Cai said that China’s thermal coal prices should rise as power utilities restock.

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