Posted on 02 Dec 2021
The Department of Price under China's National Development and Reform Commission (NDRC) has begun a study in conjunction with China National Coal Association (CNCA) to establish a system enabling domestic coal production, trading and distribution costs to be surveyed, according to an NDRC WeChat post on November 30. The CNCA is a grouping of over 1,100 members including coal miners, traders and institutes.
NDRC said that at a related meeting it had held, enterprises had requested that government authorities be kept abreast of changes in coal production and distribution costs via the survey, and that measures be adopted to guide coal prices within a reasonable range. The unnamed enterprises also noted that costs for all types of coal would be impacted by the degree of difficulty experienced in extracting the coal, the mining technology employed, the required investments in safety and environmental protection, and transportation conditions, according to the post.
Participants at the meeting acknowledged that costs are the foundation of prices, and that in normal circumstances, coal prices should reflect the costs of coal production and logistics, as well as the actual supply and demand, and all kept within a reasonable range, NDRC noted.
NDRC is working on an equitable scheme for coal pricing in response to the significant volatility of coal prices this year, including work to kick off surveys on coal mining and distribution costs and to establish a regulation system for coal prices, Mysteel Global understands.
Earlier on November 24, NDRC's Department of Price held another meeting with economic and legal experts regarding further study on the coal pricing scheme. Those involved suggested establishing a long-term mechanism for coal price regulation to help ensure that coal prices reflect actual market fundamentals and so avoid serious volatility, according to another post on NDRC's website on November 25.
The regulation includes measures based on Chinese law to intervene in the coal market when prices exceed a reasonable range, or should coal prices decline below the range, allow authorities to adopt measures to guide the price to rebound, experts suggested.
Source:Mysteel Global
