BEIJING (Reuters) -China has set a “reasonable” price range for the benchmark 5,500 kcal thermal coal at Qinghuangdao Port for medium- and long-term trading at 570-770 yuan ($86.98-$121.77) a tonne, the country’s state planner said on Thursday.
The move comes as Beijing strives to balance the profits of coal miners and power generators after widespread electricity outages and runaway coal prices last year.
“The price range is determined on the basis of full considerations of costs and profits in coal mining and power industries,” said Zhou Banxue, a senior official from the National Development and Reform Commission (NDRC) at a news conference.
As the logistics costs of delivering coal from mines to ports are relatively stable, the price guide at ports will also help limit prices at mines, the official said.
The state planner had summoned major coal miners, port operators and power plants for several meetings since October to set price targets for thermal coal.
It has also probed “abnormal trading behaviors” and pricing of index providers to ease the price rally in recent weeks. At least three index providers have suspended publishing daily price assessments.
Still, the price range is well below current spot price levels for Qinhuangdao coal [SH-QHA-TRMCOAL] of around 970 yuan a tonne. The benchmark has surged 23% since the beginning of the year.
The most-traded Zhengzhou thermal coal futures contract dipped 1.8% to 813 yuan a tonne as of 0640 GMT.
“Setting a price range does not mean that we are going back to government pricing”, Wan Jinsong, director of the price department at the NDRC, said at the news conference, adding that the government will not intervene as long as coal prices are within the range.
The NDRC will also closely monitor spot coal prices and will seriously investigate market speculation and illegal market practices such as fabricating information about prices.
“We will timely assess the price range based on coal production costs and the developments in energy industry,” said Peng Shaozong, deputy director of NDRC’s price department at the same news conference.
($1 = 6.3234 Chinese yuan renminbi)
(Reporting by Muyu Xu and Chen Aizhu; Editing by Kim Coghill)
