China Caps Thermal Coal Prices

Coal Age Staff
(Feb. 15, 2018) – China’s Qinhuangdao port started to cap thermal coal prices for FOB 5,500 kcal/kg coal at RMB750 per metric ton (mt) ($118.28/mt), following a request from China’s National Development and Reform Commission (NDRC). Colder-than-normal weather in January resulted in strong thermal coal demand and a subsequent increase in prices. Spot thermal coal prices for FOB Qinhuangdao 5,500 kcal/kg reportedly reached RMB780/mt ($123/mt) recently.
These high prices and the potential for them to rise even further is likely what prompted NDRC to intervene.
“The price cap will have an impact from now until mid-March,” said Zhai Yu, northeast Asia senior consultant, Wood Mackenzie. “Demand for thermal coal will fall in February during the Chinese New Year holiday. But supply will also fall for the same reason. After the holiday period, demand will quickly return and restocking by gencos will add additional demand. Without the price cap, we do not expect prices for FOB QHD 5,500 to drop below RMB750 per ton until the middle of March, when the need for heating coal disappears.”
The price cap will be difficult to implement, Yu said. The measure impacts thermal coal prices, Yu explained, but it is only the power industry that has called for coal prices to be restricted. “As electricity tariffs are fixed, high coal prices resulted in big losses for the gencos in 2017,” Yu said. “Non-power industries aren’t so bothered by coal price fluctuations as their product prices are market-driven and can adapt accordingly.”

http://www.coalage.com/news/latest/5846-china-caps-thermal-coal-prices.html#.Wq3QgqgbPIV

17. March 2018 by Terry Headley
Categories: transmission | Comments Off on China Caps Thermal Coal Prices