Chinese regulators and policymakers have intensified scrutiny of the coal market amid an ongoing energy crunch, saying investigation teams would be sent to mining areas, while output of the fossil fuel would be increased.
The National Development and Reform Commission (NDRC) and the State Administration for Market Regulation said on Wednesday they had formed four joint inspection teams for each of the coalmining areas of Shanxi, Shaanxi, and Inner Mongolia, and the main loading port of Qinhuangdao and other harbours to carry out special supervision of coal spot market prices.
The teams would “go deep into coal mines, trading markets, shipping stations, coal storage yards, wharf yards, coal trading companies, and coal users to conduct on-site investigations of coal spot market prices”, the NDRC said in a statement.
The administration, it added, would “severely crack down on illegal activities” such as “fabricating or disseminating price increase information, hoarding, driving up prices, and price collusion”.
The NDRC said coal production had increased in October to more than 11.5 million tonnes, an increase of more than 1.2 million tonnes over September. Shanxi, Shaanxi and Inner Mongolia account for more than 80% of output.
The coal crunch has been exacerbated by pressure to develop renewable energy sources and reduce emissions.
Xinhua reported on Wednesday that Shanxi has eliminated 157 million tonnes of coal production capacity in the past five years, while the installed capacity of wind power and photovoltaic power has increased by 24% and 63% respectively.
“On the whole, intervention in coal prices continues to increase,” Sinosteel Futures analysts said in a client note on Thursday, saying the market was still in a state of “panic”.
They expected the government’s focus to be on implementing policies related to “guaranteeing supply and stabilising prices” for coal.
Thermal coal futures have nearly halved since October 19. The most-traded contract on the Zhengzhou Commodity Exchange fell 13% on Thursday to 1,033.80 yuan ($161.47) per tonne, hitting the daily trading limit.
• George Russell