Posted on 04 Mar 2022
China's National Development and Reform Commission (NDRC) has maintained its tight grip on the domestic thermal coal market, setting the minimum ratio of monthly fulfilment of medium- and long-term thermal coal supply deals between the miners and power houses recently as part of the continuing efforts in stabilizing the supply and price of the crucial energy product.
Recently, NDRC has sent notices to all the related parties, requesting both the coal miners and power houses to submit term contract fulfilment updates online on the monthly basis, requesting those under monthly arrangements to be fulfilled by at least 80% in volume and those under quarterly or annual by at least 90%, according to a NDRC post on March 2.
Besides, NDRC will also conduct spot checks on related parties to verify the volumes and prices, and any that have been found disobeying the requests will be penalized accordingly. The commission has set Yuan 570-770/tonne ($90-122/t) including the VAT as the price guidance for the transshipments from Qinhuangdao port under medium- and long-term supply deals, as reported.
In the long run, security in energy supplies and in the supply chains of various industrial sectors should be maintained when the country is proceeding with carbon emission peak and carbon neutral efforts, according to Han Zheng, vice premier of China, and he, thus, emphasized the importance of orderly and gradual restructuring and optimization in the domestic coal industry, according to a Xinhua new report on March 1.
Other than thermal coal, NDRC will also step up its curtailing measures in the iron ore market, according to its other post on February 28, as iron ore prices had been soaring abnormally. The market has been on Beijing's watchlist since mid-January.
Seaborne iron ore prices have appeared resilient despite NDRC's repeated warning on too high prices and the fact that at present, China's iron ore market has been rather balanced with iron ore stocks hovering at multi-year highs, according to NDRC.
The latest price surges, thus, suggests that speculative trading has been partly responsible, which has prompted the commission to enhance its surveillance and crack down hard on any misconducts including spreading false and fake information, playing up prices, and malicious speculation, Mysteel Global noted from NDRC's February 28 post.
As of March 2, Mysteel SEADEX 62% Australian Fines gained for the second day by another $0.75/dmt on day to $144.65/dmt CFR Qingdao.
Source:Mysteel Global
