China raises thermal coal trading fees after volumes jump

PUBLISHED : Thursday, 29 September, 2016, 12:46am
UPDATED : Thursday, 29 September, 2016, 12:46am

China raised transaction fees for a thermal coal futures after trading volumes surged to a record and prices rose to the highest in two years.

The Zhengzhou Commodity Exchange will start collecting transaction fees for coal contracts that were opened and closed in the same day, the bourse said Tuesday in a statement on its website, without giving further details.

The exchange is probably trying to curb speculation after volumes spiked, according to Deng Shun, an analyst with ICIS China.

Investors piled into Chinese commodities exchanges in the first half of the year, driving up prices and stoking fears of a bubble, on bets that economic stimulus and industrial reforms would lead to shortages of everything from cotton to iron ore.

The authorities quelled the frenzy, with bourses raising transaction fees and required margins. While volumes for most contracts haven’t recovered, coal trading has ballooned in recent weeks on speculation that mining cutbacks are leading to shortages.

“The exchange is apparently concerned about any big volatility in the contract,” Shun said by phone from Guangzhou.

Front-month thermal coal futures on the Zhengzhou exchange jumped to 532.40 yuan per tonne on September 22, a shade below a two-year high of 532.60 yuan a tonne reached earlier in the month. The January contract fell 0.1 per cent to 527 yuan in overnight trading. A record 1.217 million thermal coal contracts changed hands with a total turnover of almost 64 billion yuan (US$9.6 billion), bourse data show. Chinese exchanges count both the buy and sell side of a futures contract.

A spokesman for the exchange was not reachable by mobile phone after normal business hours.

Coal prices in China have risen this year as the government’s efforts to cut overcapacity and promote less-polluting fuels slowed mining.

Output fell more than 10 per cent in the first eight months of the year, causing imports to rise to the highest since 2014 and forcing policy makers to coordinate higher production from the country’s biggest miners.