**Take tough measures to curb the irrational rise in coal prices

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**Tough measures to curb irrational rises in coal prices Author/Source: Sinochem New Network Date: 2021-10-22 Clicks: 110 Coal is crucial for industrial production as well as for people’s heating needs. For some time now, coal prices have been rising rapidly, reaching new historical highs. The Development and Reform Commission described this as a situation \"completely detached from the fundamentals of supply and demand,\" and noted that \"there is still a trend of further irrational price increases.\" Against this backdrop, relevant authorities took intervention measures in accordance with the law to help bring coal prices back to a reasonable range. 　　An important item on the agenda of the executive meeting of the State Council held on the 20th was to hear a report on the guarantee of energy supply for people’s livelihood needs. To ensure that the people can spend the winter safely and warmly, the meeting made a series of arrangements, including \"cracking down on speculation in the coal market in accordance with the law.\" 　　The day before, the **Development and Reform Commission held three symposiums in and around Beijing, all centered on the theme of \"coal\". 　　In the first session, key coal enterprises, the China Coal Industry Association, and the China Electricity Council were brought together to discuss the implementation of legal interventions regarding coal prices. 　　In the second session, key enterprises in the coal, electricity, oil, gas, and transportation sectors were brought together to discuss and plan various measures to ensure that the public can spend the winter comfortably. 　　In the third session, the Financial Affairs Department of the National Development and Reform Commission went to the Zhengzhou Commodity Exchange for research and held a special symposium, proposing measures such as \"strengthening thorough supervision of the futures market\" and \"cracking down severely on malicious speculation by capital entities through legal means while making such actions public.\" 　　It’s not just the **Development and Reform Commission**; reporters have learned that the State-owned Assets Supervision and Administration Commission of the State Council has also introduced measures for evaluating and rewarding or punishing entities based on their performance in ensuring energy supply this winter and next spring. Ensuring a stable supply has been set as a key criterion for evaluating enterprises this year, with a \"one-vote veto\" system in place. 　　Intense activity has an immediate impact on the futures market. On the evening of the 19th, the main contract for thermal coal futures quickly hit the lower price limit. The main contracts for coking coal, coke, etc. are also largely trading around the lower price limit. 　　A senior official from a large power company in Shanxi told Xinhua News Agency reporters that, given the currently soaring market prices for coal, imposing legal intervention measures on coal prices is a timely \"fever reducer\". 　　The reporter learned that, in accordance with the arrangements of **** and the State Council, relevant parties have been working effectively and systematically to ensure a stable supply of energy and maintain stable prices, and have achieved some initial results. For example, since the end of September, a number of additional coal mines have been approved for operation; on October 18, the daily coal production exceeded 11.6 million tons, reaching a new high this year. On the basis of the annual medium- to long-term contracts already in place, power and heating generation companies have signed additional medium- to long-term contracts for 150 million tons of coal. In some provinces, the coal supply needed to meet the requirements under these medium- to long-term contracts has been secured, and signing procedures are being accelerated. 　　**Sun Qingguo, director of the Safety Foundation Department of the Mine Safety Supervision Bureau, said at a regular policy briefing held by the State Council on the 13th that 976 coal mines have been reviewed. Following the principle of handling special situations in special times, allowing appropriate flexibility while maintaining strict safety standards, safety assessments were conducted for each mine individually. Among them, 153 coal mines meet the conditions for ensuring safe supply, which will increase production capacity by approximately 220 million tons per year. It is expected that coal production will rise by 55 million tons in the fourth quarter, with an average daily increase of 600,000 tons. 　　Use deeper reforms to address underlying issues. Our country is further deepening the market-based reform of the on-grid electricity prices for coal-fired power generation; recently, the new market transaction prices in regions such as Guangdong, Jiangsu, Shandong, Hubei, and Shanxi have seen an increase of nearly 20% in line with the relevant price policies. 　　Chen Zheng, director of the Energy Strategy and Policy Research Institute of China Southern Power Grid, believes that the series of measures introduced recently are not only a \"timely relief\" to address the contradictions in coal and electricity prices and alleviate the current shortage in electricity supply, but also a \"catalyst\" for allowing more market entities to enter the sector, expanding price flexibility, giving better play to the role of the market, and pushing electricity market reform forward to a new stage. 　　To further ensure a stable supply and prices, the **Development and Reform Commission proposed eight measures at a meeting held on the 19th: further expanding coal production capacity, steadily increasing coal output, ensuring that all power and heating generation enterprises have long-term coal supply contracts, and encouraging coal-fired power plants to operate at full capacity. 　　Can the electricity and gas needs of households be effectively met? Zhao Chenxin, Secretary-General of the National Development and Reform Commission, said previously that residential electricity consumption accounts for around 15% of total electricity use, while household gas consumption makes up less than 50% of total gas use; therefore, there is no problem in ensuring full coverage of these household electricity and gas needs. 　　“The electricity supply for residents, agriculture, and public welfare purposes will still be ensured by power grid companies, with the current price levels remaining unchanged. ”**Wan Jinsong, director of the Price Department of the National Development and Reform Commission, said. 　　**The Development and Reform Commission has made it clear that efforts should be made to identify abnormal transactions and malicious speculation. Key coal ports are required to proactively provide regulatory authorities with information on illegal activities such as malicious stockpiling and price gouging; transportation and loading/unloading of transactions that clearly exceed reasonable levels should be restricted, in order to maintain order in the coal market. 　　Relevant areas are accelerating implementation. Taking Yulin in Shaanxi, one of China’s main coal-producing regions, as an example, reporters learned that on the 19th, Yulin city held a special meeting on ensuring coal supply for the fourth quarter, ordering relevant enterprises to sign commitments to maintain supply and stable prices, and stipulating that the prices specified in existing long-term contracts must not be changed. At the same time, it is required that departments such as those responsible for development and reform, ecological environment, market supervision, and taxation make full use of relevant laws and regulations including the Price Law to impose joint sanctions on coal enterprises that violate the regulations, thereby helping to bring coal prices back to a reasonable range. 　　Zhang Yansheng, a senior researcher at the China Center for International Economic Exchanges, believes that the continuous rise in coal prices is the result of the combined effect of various international and domestic factors. “In the short term, strict regulation is necessary; from the perspective of long-term high-quality development, it is essential to further deepen reforms, particularly in the area of market-based reforms in the coal power sector, and to make greater efforts in coordination. ”