09 Jun 2021
China is considering imposing a cap on the price of thermal coal as it struggles to contain stubbornly high energy costs ahead of peak demand over the summer.
One idea under discussion is to cap the price at which miners sell coal, according to people familiar with the plan, who declined to be named because the matter isn’t public. Yulin, a major production base in northwestern Shaanxi province, is already testing a price cap, one of the people said.
Another idea is to enforce a limit of 900 ($141) or 930 yuan a ton on the benchmark price at the port of Qinhuangdao, which would influence other markets nationwide, the people said. Under this scenario, power plants would be advised by the authorities that they can’t buy coal above that level. The second plan is currently being tested at the port by some state-owned generators, one of the people said.
No final decision has been made on whether to adopt price controls and the plans are subject to change, the people said. A fax to the National Development and Reform Commission, China’s top planning agency, didn’t get a response.
The Qinhuangdao price hit a record 962 yuan on May 19. It has since moderated to 865 yuan a ton — still well above the historical average of 547 yuan — after China ratcheted up its campaign to tame soaring commodities prices before rising costs fuel inflation and harm its economy.
Source : https://financialpost.com/pmn/business-pmn