In mid-August the State Council, China's cabinet, after saying it would encourage coal mining companies to develop clean-coal technology and upgrade their production systems to expand output, committed itself to work on pricing reform so electricity prices would be in line with price fluctuations of coal.
In the meantime, the National Development and Reform Commission said it would permit one-year contracts between coal producers and power companies to be renegotiated amidst recent power shortages and heightened coal prices.
Prices for coal have risen from RMB 185- 206 per tonne early in the year to RMB 300- 320 per tonne by late mid-year, leading some coal producers to renege on their earlier-priced contracts. Although coal pricing is officially deregulated, Beijing provides coal's clash of price points guidelines to coal producers because power companies are not yet allowed to freely set power tariffs.
A big coal price driver is transport, and delivered coal prices have been going up, especially for steelmakers. Thanks to transport bottlenecks on the rail grid, three-week stockpiles of coke have piled up at some locations.
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