Shivani Singh

BEIJING (Reuters) -China’s thermal coal futures sank about 13% on Friday, extending their losses since Tuesday when Beijing said it would intervene to cool surging prices https://www.reuters.com/world/china/china-liberalise-thermal-power-pricing-tackle-energy-crisis-2021-10-12 of the commodity to help electricity producers out of a widespread power crunch.

Zhengzhou Commodity Exchange’s active thermal coal futures for January delivery fell to 1,384yuan/tonne at 1130 Beijing (0329 GMT) — more than 30% lower than Tuesday’s historic peak of 1,982yuan/tonne.

After falling by the maximum of 12% on Thursday, coke and coking coal were down 9.91% each on Dalian Commodity Exchange morning trade.

China is facing a growing power crisis due to coal shortages. However, record-breaking fuel prices have been recorded amid strong post-pandemic demand for greener fuels.

China stopped production in factories, which has led to factory gate inflation.

China has been pushing miners to increase coal production, and to import more to ensure that power stations have enough stockpiles to withstand the winter heating season. Analysts however believe shortages will persist at least for a few months.

Atilla Widnell is the managing director of Navigate Commodities Singapore. She stated that “We now see the fruits of China’s supply response”, as the government has granted miners carte blanche in order to produce at full throttle – even allowing the relaxation of safety inspectors in certain cases.”

Widnell stated that “the parabolic pricing movement largely represented buyers’ fear of not being able to source enough volumes to feed coke ovens and power plants.”

He stated that the price of goods will fall nearly as fast as it has risen, now that there is a surge in supply.

MEASURES FOR TAMING RUNAWAY PRICES

The National Development and Reform Commission of China (NDRC), China’s official planner for state, said this week it is looking at ways to reduce coal prices and will take every step to get them within a sensible range.

Friday’s announcement by the NDRC stated that inspectors would be sent to key coal-producing regions in order to examine costs associated with coal production and distribution.

The company stated that they had spoken with key companies and the China Coal Industry Association to discuss ways of preventing coal companies seeking exorbitant profits.

China’s securities regulator stated that it will ask futures exchanges for fees to be raised, trading quotas restricted and a crackdown on speculation as a result of high coal prices.

China Daily, a Chinese state media outlet reported that the NDRC had concluded “that the unbridled soaring coal prices was partly driven by those who are trying to strike the jackpot by taking full advantage of power supply shortages.”

The newspaper stated that there should be no tolerance for the hoarding or storage of coal. The newspaper stated that it was crucial to curb coal prices because they can pose a risk to the daily lives of people when winter arrives.

The National Meteorological Center stated that temperatures are below normal in many parts of eastern and central China due to rain and cold winds.