Some of China’s major coal producers have pledged not to raise coal prices this winter and next spring, after the government asked state-backed companies to secure electricity supplies. and stable coal “despite the cost”.
China’s thermal coal prices have surged more than 200% this year to a record high as mine safety, anti-corruption and flood inspections in major mining regions dent supply.
China Energy Group and Shanxi Jinneng Holding Group (SJAMG.UL), the largest and eighth largest coal miners by output in China, said the groups would promote push output and “adjust prices within a reasonable range”.
These two corporations have pledged to keep the spot price of thermal coal with an energy density of 5,500 kcal at 1,800 yuan/ton ($282/ton), while the price of thermal coal with a density of 5,000 kcal and 4,500 kcal, respectively. 1,500 yuan/ton and 1,200 yuan/ton.
The price of other thermal coals with higher calorific value will not exceed 2,000 yuan/ton. China’s thermal coal futures on the Zhengzhou Commodity Exchange fell 8% at the opening session on October 20, after hitting a record high of 1,982 yuan a tonne on October 19.
Several other state-backed coal miners in China’s top coal mining region, such as Shanxi, are also offering similar price cap plans.
China’s Vice Premier Han Zheng has called for “tough measures” to strictly manage the speculation in coal prices. The state asset watchdog has also urged state-backed companies to prioritize coal supplies and asked power plants to stockpile raw materials “regardless of cost”.
China’s daily coal production stood at 11.6 million tonnes as of October 18, compared with about 11.2 million tonnes last month.
The National Development and Reform Commission (NDRC) said government intervention in coal prices was discussed at a meeting of major producers, amid “the current price increase has been completed”. completely deviated from the fundamentals of supply and demand.
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