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Coal Swings as Traders Weigh China’s Vow to Keep the Lights On

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(Bloomberg) -- Coal futures in China swung back from losses to resume a record advance as traders weigh the prospects for rising winter energy demand and tight supply of the fuel.

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An expanding electricity shortfall in regions including Shanxi is underscoring the challenge authorities face to deliver power to homes and heavy industry even as coal mine supply begins to rise from key production hubs.

Rising prices show “the market is still betting on supply shortages,” said William Wang, managing director at Singapore-based Yeyuan Commodity, which trades materials including coal.

Thermal coal futures on the Zhengzhou Commodity Exchange traded 3% higher at 1,608.80 yuan ($249.83) a ton as of 11:32 a.m. in Beijing Thursday, after earlier declining as much as 4.7%. The most active contract has gained 24% in the previous three sessions and closed Wednesday at a record of 1,562.80 yuan a ton.

China’s National Development and Reform Commission said at a Wednesday briefing that the country has implemented power market reforms, curbed energy-intensive industries and bolstered coordination between agencies as it seeks to ensure supplies of electricity, coal, natural gas and oil through the winter and spring.

See more: China Promises Winter Warmth Without Sacrificing Climate Goals

The assurances came after other steps to bolster stockpiles. China has told miners to spare no cost in boosting output. Imports of coal and gas surged in September. And most regions in the country are curtailing electricity to large industrial users to ensure there’s enough to heat homes throughout the cold season.

Still, the country’s top leaders have identified fuel supply shortages as the top threat to energy security, and said China should boost its capacity for self-sufficiency.

(Updates with prices rising)

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