China weighs price caps on coal as supply shortage sends energy prices soaring
- Chinese authorities are exploring ways to control surging energy costs, including by capping coal prices
- An unusually hot start to summer and a ban on Australian coal are driving up coal prices and causing blackouts
Chinese authorities may intervene to control surging energy costs by capping the price of thermal coal as a ban on imports from Australia and rising electricity demand during an unseasonably hot start to summer wreak havoc in the power market.
The crisis could, however, pave the way for more electricity generation from gas-fired plants based in China’s southern Guangdong province, analysts say.
Chinese authorities are discussing ways to control the cost of energy to consumers, including by capping the price miners can sell coal and placing a limit on the benchmark coal price at the port of Qinhuangdao, the nation’s main coal shipping centre, Bloomberg reported on Wednesday.
Domestic prices of thermal coal – the raw material used to generate electricity – based on the benchmark price in Qinhuangdao shot past 1,000 yuan (US$156) a tonne earlier this year, and well above the upper limit of about 600 yuan set by China’s top economic planning agency, the National Development and Reform Commission (NDRC).
Prices eased in late May but still remained elevated at about 700 yuan to 800 yuan, according to the National Bureau of Statistics.