China eyes coal market intervention to curb price spikes
BEIJING: China’s top economic planner said it is considering an intervention to bring down soaring coal prices, as Beijing frets over a cost spike that has put increasing pressure on the country’s energy security and growth, while posing a threat to the global economy.
The world’s number two economy expanded slower than expected in the third quarter as an energy crisis began to bite, official data showed this week, with electricity shortages and production cuts dragging industrial output.
The crisis comes as global commodity prices soar owing to a surge in demand as the world reopens from Covid lockdowns, while the problem has been exacerbated by government targets to cut emissions and a sharp drop in imports from Australia owing to a political standoff.
On Tuesday, the National Development and Reform Commission (NDRC) said it was studying measures to cap coal prices, which have hit record highs.
In an online statement published after meeting with industry leaders, the NDRC noted that costs “have risen rapidly, hitting successive record highs, greatly pushing up production costs… and adversely affecting power supply and winter heating”.
It warned it would take a “zero tolerance” approach and “severely crack down on” activities like spreading false information or price collusion, so as to maintain market order.
“The current price increase has completely deviated from the fundamentals of supply and demand,” it added, pledging to have prices return to a “reasonable range”.
In a separate notice on Tuesday, the agency stressed that coal mines in the country should strive to achieve more than 12 million tonnes in daily output, with local authorities to ensure production is maximised.
The country’s thermal coal futures fell in overnight trading.
Nearly 60 percent of China’s energy-hungry economy is fuelled by coal, and it has struggled to wean itself from the fuel despite a pledge to become carbon neutral by 2060.
In recent months, China has been hit by widespread power cuts that forced factories to delay production as businesses are ordered to minimise energy usage.
Officials have been looking for ways to combat the price rally as the winter months approach, ordering mines to expand coal production and for top state-owned energy companies to ensure adequate fuel supplies at all costs.
Localities have also been taking action, with coal port Qinhuangdao reaching an agreement with miners, power plants and railway operators to cap the cost of some supplies at no more than 1,800 yuan ($280) a tonne, according to the state-run Economic Daily.
China’s coal inventories stand at 88 million tonnes, enough to last 16 days, according to the NDRC.