Chinese coal dealers claim they are depending on direct connections for pricing data as Beijing tries to control prices. NDC, the nation’s chief economic regulator, stated this week that it would probe coal and energy indices suppliers for disseminating manufactured prices. The regulatory body is also researching a new system to keep coal prices stable over time. The increased monitoring adds to an already strained Chinese coal trading market, which is striving to keep pace with fast market and policy developments.
While Beijing seeks to spearhead a rebound from the pandemic outbreak, the price uncertainty exacerbates the country’s biggest power shortage in years. Ever since September, Beijing has taken numerous steps, from increasing mine output to opening up thermal power prices. Whereas dealers for some time stopped following local indices. “We no longer need to phone other merchants for price movements,” stated a Guangxi-based coal dealer who, like others questioned regarding this news, refused to be identified.
China Increased Regulations To Reduced Rising Prices
China tightened regulations for resource index suppliers in June to cool soaring prices for copper and iron ore. The recent crackdown on coal data providers was prompted by persistently high coal prices. Following Beijing’s cutbacks, the benchmark Zhenzhou fossil energy futures fell 10% to 1,144 Yuan on Wednesday. However, the price has gone up this year.
Previously, data such as the coal use at large energy plants and harbor inventory levels were extensively published on social media. Traders claim that data has been either paid for or removed for months. The market has had to depend on personal contacts or foreign prices.
A power expert in Beijing claimed they are now utilizing unrestricted Indonesia prices plus transportation costs to compute delivered rates at power facilities. Some sources keep updating spot coal transaction information with amounts from months ago. “Some pricing indices still publish daily estimates, but the prices are way off,” claimed a coal merchant in Beijing. “We have almost no credible pricing indices now.”
Certain Coal Prices Remains Unchanged Since July
The China Coal Processing and Logistics Organization, a data source, publicly disclosed on Wednesday its benchmark prices for 5,500 kcal Bohai Rim thermal coal at 946 Yuan per ton, the same as in mid-August. On Wednesday, the webpage of consultant Fenwei Digital Info Technology reported certain coal prices unchanged since July at around 1,000 Yuan per ton. Traders told Reuters that sales were conducted last week in Bohai Rim and Guangdong, both for over 2,000 Yuan.
The China Coal Transport and Logistics Organization declined to comment further. Fenwei remained silent. Requests for comment from the NDRC went unanswered. Since June, when Beijing released new rules requiring more openness and consistency in pricing, Chinese network operators have been quiet.
The authorities stopped Yulin Coal Market Centre Corp from posting price evaluations and market announcements in September. “We took a break from publicizing regional coal pricing. It’s quite sensitive,” said a Beijing resource price evaluation manager.