China to bring coal prices back to appropriate range

Workers unload coke from a train at a logistics yard in Qian'an City, north China's Hebei Province, Sept. 16, 2021. (Xinhua/Mu Yu)

China's top economic planner has said it will use all necessary means provided by the price law to bring coal prices back to an appropriate range and ensure a secure and stable energy supply on Oct. 20.

The recent coal price hike has completely deviated from the fundamentals of supply and demand, and prices are still showing further irrational rises, said the National Development and Reform Commission (NDRC). The NDRC made the comments after holding symposiums with major coal companies, the coal industry association and the China Electricity Council.

Coal is a pivotal energy source for China. It is closely related to the national economy and people's livelihood, the NDRC said, adding that it will come up with measures to control coal prices per the law.

When the prices of important commodities and services rise significantly or are likely to rise significantly, relative authorities may take intervention measures like limiting profit margins, stipulating price limits, and implementing a price increase filing system, according to the country's price law.

Market regulators will step up enforcement and inspection, clamp down on illegal activities such as spreading false information, price gouging, and hoarding, and effectively maintain market order.

The country has made progress in ensuring energy supply and stabilizing energy prices, said the NDRC.

Since the end of September, a batch of coal mines has been approved and put into operation. On Oct. 18, the country's daily coal output exceeded 11.6 million tonnes, setting a new high this year, the NDRC said.

The NDRC last week announced an improved pricing mechanism for coal-fired power to deepen market-oriented pricing reform in the sector.

The floating range of the market-based electricity transaction prices is adjusted in principle to 20 percent fluctuation in either direction, compared with the current ceiling of 10 percent and the floor of 15 percent from the benchmark price.

The market transaction prices of coal-fired electricity for high energy-consuming enterprises are not restricted by the ceiling of 20 percent upward fluctuation.

All local governments should prioritize the supply of low-cost power for residents and agriculture, said the NDRC.

Next, the country will further release coal production capacity, steadily increase coal output, and secure energy transportation.

Efforts should be taken to further promote medium-to-long-term coal supply contracts between coal companies and power generators and heating suppliers to secure sufficient coal for the sector, said the commission.

The commission urged paying close attention to the price fluctuation of steam coal futures. It also encouraged effectively maintaining market order and creating a conducive capital market environment to ensure coal supply.