China’s coal producing regions to face inspections to prevent price fixing, ‘malicious’ hoarding

Regulators will watch price levels, stockpile changes to gauge potential manipulation, state planning agency says

PUBLISHED : Friday, 27 October, 2017, 4:08pm
UPDATED : Friday, 27 October, 2017, 4:08pm

China will send inspection teams to coal-producing regions and ports to target “malicious” hoarding and “price monopoly” as regulators seek to ensure stable prices during the peak winter demand period.

Inspectors would closely watch price levels and stockpile changes to gauge potential manipulation by market participants, including producers, that are aimed at boosting prices, the National Development and Reform Commission said on Friday. Violators would be severely punished, it said.

Beijing is keen to ensure stable energy supplies – from coal to natural gas – this winter when households rely on the fuels for heating. Regulators have warned that surging gas use coupled with insufficient infrastructure may create severe supply shortfalls as the weather turns colder.

The NDRC earlier this month called for the swifter approval of advanced coal capacity projects.

“Government efforts to curb coal prices are likely to work,” Tian Miao, a senior analyst at Sun Hung Kai Financial in Beijing, said. “Coal prices may fall by as much as 10 per cent at end of the year from current levels.”

China orders supplies of fuel for heating to be maintained as winter approaches

According to people with knowledge of the matter, Lian Weiliang, the NDRC’s vice-chairman, said in a meeting with coal miners earlier this month that current coal prices were “irrational” and that regulators would step in if they continued to stay outside a targeted range.

The so-called “green” range for coal refers to prices between 500 yuan (US$75) and 570 yuan a tonne, according to industry websites and officials. China’s benchmark power-station coal at the port of Qinhuangdao was at 618 yuan per tonne as of Monday, according to figures from the China Coal Transport and Distribution Association.