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Coal exchange gets the green light

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The central government has given the green light for the establishment of a national coal exchange, liberalising one of the last remaining commodities whose price is still under state control.

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The State Council, or cabinet, has approved the exchange to be set up in Taiyuan, capital of Shanxi, which accounts for a third of national proved coal reserves, according to the official Shanxi Youth Daily.

Trading volume was targeted to more than double to 500 million yuan from 215 million last year conducted through Taiyuan Coal Trading Market, a body to be replaced by the proposed exchange, it added.

Bulk contract coal prices, usually fixed during annual industry meetings, were supposed to be market-oriented in the past few years but Beijing had pressured involved parties to agree on state-guided price at times of protracted disagreements to ensure continued supply and contain inflation.

Beijing could withdraw transportation capacity guarantees for traders who failed to agree on prices.

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Coal is among few commodities, which include fertiliser, natural gas, electricity and petroleum, whose prices are state-stipulated or guided.

Shanxi Coal Transportation and Distribution, which had arranged the industry meetings for buyers and sellers, would be the promoter of the exchange, according to a Shanxi Evening News report.

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