China’s power-station coal prices rebounded from the lowest level in seven years as government-ordered production cuts started to take effect.

Spot coal with an energy value of 5,500 kilocalories per kilogram at the port of Qinhuangdao, the nation’s benchmark grade, rose to an average of 480 yuan ($78.20) a metric ton as of yesterday, according to data from the China Coal Transport and Distribution Association in Beijing, known as CCTD. That’s the first weekly gain since June. Price has been unchanged at 475 yuan beginning from August 10, the lowest level since September 2007.

China, the world’s largest coal market and emitter of carbon dioxide, is seeking to reduce output at 14 of its biggest producers after prices slumped amid efforts to moderate economic growth and fight pollution. Curbing supply may shore up prices by 10 percent in the fourth quarter, according to ICIS-C1 Energy, a consultant in Shanghai.

“It’s indeed a result from output cuts among a series of other recent coal-industry protection policies,” Winston Han, an analyst at CCTD, said by phone today. “A proposed reduction in both output and capacity are seeing some direct effects and a rebound may last through year-end.”

Government Fines

The government rules, which target a 10th of output at the biggest producers, or about 63 percent of China’s annual imports, will reduce supply by 190 million tons, equivalent to 5 percent of this year’s production, according to UOB-Kay Hian, a Singapore-based broker. Coal may average at 555 yuan a ton through Dec. 31, it predicted.

Mining companies that flout the requirements face fines of 500,000 yuan to 2 million yuan and may be suspended, said the National Development and Reform Commission, the top economic policy planning body.

China will also ban the sale and import of coal with ash content of more than 40 percent and sulfur of more than 3 percent starting Jan. 1 as it seeks to improve the country’s air quality, according to a regulation posted on the NDRC’s website on Sept. 15.

Source: Bloomberg