China to tighten control over coal prices ahead of Chinese New Year

[BEIJING] China will tighten controls on coal prices and crack down on illegal practices in the spot and futures market, the National Development and Reform Commission (NDRC) said on Friday.

The comment came as the benchmark spot price for 5,500 kcal thermal coal at ports soared 30 per cent this month, reaching more than 1,000 yuan (S$213) a tonne this week, and is approaching an unofficial government price cap of 1,100 yuan a tonne.

The most-active Zhengzhou thermal coal futures contract jumped as much as 20 per cent since the beginning of this year and hit 830 yuan a tonne on Friday, a level last seen in late November.

"Under the situation that market supply and demand is generally stable, the spot and futures prices of domestic coal have risen rapidly in recent days, which has brought adverse impacts on the smooth operation of the coal market and the safe and stable supply of energy," the NDRC said in a statement.

The state planner said late Thursday that total coal inventory at Chinese power plants reached a record high of 170 million tonnes as of Jan 26, up 44 per cent from a year ago.

Beijing has also urged state-owned coal miners to maintain normal output during the week-long New Year holiday, which officially kicks off on Jan 31.

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"The NDRC pays close attention to changes in coal prices...and will work with relevant departments to further strengthen the regulation and supervision of market prices," it said.

"(We will) crackdown on illegal price behaviours in the spot and futures markets to ensure coal prices (remain) within a reasonable range." Coal futures prices plunged 6.4 per cent to 756.2 yuan a tonne by the time market closed at 0700 GMT. REUTERS