Industry trade

Chinese coal futures skid on signs of government intervention

BEIJING, Oct.21 (Reuters) – China’s thermal coal futures fell from the allowable high of 11% at the start of trading on Thursday, extending losses accumulated since Tuesday when Beijing signaled it could step in to cool down the costs.

China’s most active thermal coal futures dropped the opening limit to 1,587.4 yuan ($ 248.28) per tonne. They are down nearly 20% from Tuesday’s record high of 1,982 yuan per tonne, although futures prices since the start of the year have still more than tripled.

China’s state planner, the National Development and Reform Commission (NDRC), said on Tuesday it was exploring ways to intervene in high coal prices and will take whatever steps are necessary to bring them back within a range. reasonable, after convening a meeting of the main coal companies and the industry association.

Chinese law allows the State Council, the country’s cabinet and regional governments to limit profit rates and set price limits when the prices of important goods or services rise sharply, the NDRC said. He is committed to suppressing any irregularities and maintaining order in the market. Read more

A shortage of coal, China’s main fuel for power generation, has led to rationing of electricity for industry in many parts of China and weighed on economic growth in the world’s second-largest economy. Read more

China is the world’s largest producer and consumer of coal, its primary power generation fuel, and has increased domestic production to meet demand. Read more

The NDRC had said it would ensure coal mines are operating at full capacity and aim to achieve at least 12 million tonnes per day of production.

It placed the production rate at a 2021 high of over 11.6 million tonnes as of October 18, up more than 1.2 million tonnes from late September after an all-out effort to increase supply. which included approvals for new coal mines. Read more

Some large coal miners have pledged to increase production while capping prices, and China’s energy administration has urged power grid companies to maximize their purchases of electricity from renewable sources. Read more

China’s securities regulator has asked futures exchanges to raise fees, restrict trading quotas and quell speculation in response to high coal prices.

($ 1 = 6.3936 yuan Chinese renminbi)

Reporting by Shivani Singh, Muyu Xu and the Beijing Newsroom; Editing by Richard Pullin and Kenneth Maxwell

Our Standards: Thomson Reuters Trust Principles.

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