What’s new: Thermal coal spot and futures prices in China have plummeted since mid-October, a sign that government measures to cool the red-hot domestic market for the fuel are taking effect.
The most-active thermal coal futures contract on the Zhengzhou Commodity Exchange fell to 891.8 yuan ($139.40) a ton on Tuesday, extending a 10-day losing streak that has capped a 53% plunge since Oct. 19, when the price hit a record high of 1,982 yuan a ton.
The benchmark spot price for thermal coal — the kind that power generators burn to produce electricity — at China’s northern ports fluctuated between 1,150 yuan and 1,170 yuan a ton Tuesday, down nearly 50% from the price of nearly 2,000 yuan a ton in mid-October, a coal market analyst told Caixin.
Background: Surging demand for electricity coupled with tight domestic coal supplies drove the average price that power generators paid for the fossil fuel 109% higher in the third quarter from the same period in 2020, according to Citic Securities Co. Ltd.
Coal-fired power plants produced almost 69% of China’s domestic electricity in 2020, according to the National Bureau of Statistics.
Chinese authorities moved to cap the surging price of coal after many parts of the country suffered severe electricity shortages in late September. At a meeting of major coal producers on Oct. 19, top state planner the National Development and Reform Commission (NDRC) said it was reviewing measures to intervene in the market.
Contact reporter Manyun Zou (manyunzou@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)
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