Posted on 25 Feb 2022
On February 24, China's National Development and Reform Commission (NDRC) has defined reasonable coal price ranges for domestic medium- and long-term supply deals, based on the past years' price records, and this is just one day after NDRC's two WeChat posts on its step-up in surveillance over the coal futures and price reporting agencies.
For the 5,500 kcal/kg coal, for example, the term contract price should be around Yuan 570-770/tonne ($90-122/t) at the Qinhuangdao port for transhipment, NDRC shared, adding that related price ranges have been set too for coal prices under term contracts from the major mining bases of Inner Mongolia, Shanxi, and Shaanxi, all in the northern region of the country. It declined from disclosing all the price ranges in the post, though clarifying that production costs and logistics fees have been taken into consideration.
"Coal is a key product that relates to national economy and the livelihood, and in the foreseeable future, China will still rely on coal for energy consumption, the government's involvement together with market force, thus, will make sure that domestic coal price will be under watch and kept within a reasonable range as well as facilitating the effective correction between coal and electricity prices," NDRC explained.
The coal price guidance is to be honoured by all the related parties and no inappropriate intervention should be allowed as long as the term contracts are fulfilled according to the price ranges, while any contract prices above these ranges should be forced back to the levels via related lawful measures.
With the coal price guidance, China's coal-fired power houses will be able to reflect the changes in its generation costs via market forces in its charges, downstream industries will be able to better manage their input costs, and term supply deals between coal miners and power houses will also enable the government to better manage coal reserves as well as to maintain stability in economic development, it added.
Source:Mysteel Global
