- China s top economic planner is studying ways to intervene in the coal market as the government tries to control rising prices and curb shortfalls that are threatening energy security and economic growth.
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The National Development and Reform Commission said it had evaluating measures to intervene in prices and has zero tolerance for those spreading false information or collusion on the market. The agency added that China planned to raise its coal output to 12 million tons a day and give fuel priority for deliveries through ports and over railroads.
The current price increase has completely deviated from the fundamentals of supply and demand, the agency said in a statement on its WeChat page. The NDRC will study specific measures to interfere in coal prices and promote the return of coal prices to a reasonable range. China thermal coal futures fell by the limit in overnight trading, ending a surge that has seen the fuel more than double since the beginning of September amid blackouts and power restrictions. The dirtiest fossil fuel provides more than half the country s energy.
China has been seeking for months to curb the rally in coal, with little success. The government urged miners to improve output, considered price caps, released portions of its strategic reserves and ordered state-owned energy companies to secure winter supplies at all costs. China has been stung by the global energy crisis. Limited supplies of fuel have forced the country to cut power to large industrial users to ensure there will be enough available for home heating through the winter. China and other important countries are clamoring for coal and natural gas to keep the lights on, just weeks before a key United Nations climate conference in Glasgow where leaders will discuss ways of controlling emissions from fossil fuels.
Vice Premier Han Zheng called for effective measures to curb speculation and hoarding in the energy sector. While saying a better market-oriented system for coal prices will help ensure stable electricity supply, China National Radio reported Tuesday. Meanwhile Beijing s state-asset regulator urged coal producers to speed up production at mines with further output potential.
City officials in Yulin, a coal mining hub in Shaanxi province, held a meeting Tuesday afternoon to call state-owned mines there to immediately lower prices by $100 yuan $15.67 a ton with harsh measures being threatened for any companies that don t comply, industry publication China Coal Resource reported, without citing its sources.
Qinhuangdao, a key coal port, has reached an agreement with coal miners, power plants and railway operators to cap prices of some supplies at no more than 1,800 yuan a ton, the Economic Daily reported, citing the country s top economic planner.
The most active thermal coal contract on the Zhengzhou Commodity Exchange fell as much as 4.4% in overnight trading after closing at a record 1,835. Tuesday 6 yuan a ton.
Still, favorable supply and demand dynamics mean that there s a chance coal s gains can continue, Dennis Ip, an analyst at Daiwa Capital Markets, said in a research note Tuesday. Coal price hikes are expected to re-emerge with the winter heating season, said he. The fuel is responsible for more than half the country s energy.
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