China to investigate energy index providers in bid to tame coal prices

  • 10/25/2021
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BEIJING, Oct 25 (Reuters) - China said on Monday it will investigate energy price index providers as it urged coal industry participants to "strictly" meet contractual obligations, in its latest bid to tame prices that have hit record highs. The most-active thermal coal futures contract on the Zhengzhou Commodity Exchange , for delivery in January, fell more than 8% - its fourth straight daily decline - but recovered to close down 7% at 1,305.6 yuan ($204.51) per tonne. The contract shed up to another 3.8% in Monday"s night session, part of Tuesday"s trading day, taking the total decline from last week"s record high of 1,982 yuan to 35%. Thermal coal futures are still up around 150% year-to-date.China"s state planner, the National Development and Reform Commission (NDRC), said it would investigate complaints that some energy information providers, including in the coal sector, had used false transaction prices, published "hearsay" information and "fabricated" price data, and had "manipulated price indexes". "As a result, the coal price has completely deviated from the fundamentals of supply and demand, seriously damaging the national and public interests," it said. The NDRC said it would check for compliance and would summon index providers, and would punish any irregularities with measures such as suspension of publication or inclusion on a blacklist. read more It did not name any of the information providers. Dozens of organisations provide coal pricing data in China, including the China Electricity Council and the China Coal Transportation and Distribution Association. Local consultancies such as Fenwei Digital Information Technology, and Yimei, a trading platform owned by Helue E-Commerce Corp, also publish coal prices. Fenwei and China Coal Transportation and Distribution Association had no comment, while Yimei was unreachable and China Electricity Council said it was outside business hours. In September, authorities banned a coal trading firm from publishing daily prices and market news as part of efforts to regulate commodities markets and tame red-hot prices. read more NEW RULES Beijing has in recent months issued new rules for commodity price indexes and has said regulators would suspend the activities of those failing to comply. read more The NDRC also urged coal firms to strictly meet contractual obligations and asked them to strengthen the credit supervision of medium- and long-term contracts. The NDRC said it would urge upstream and downstream coal companies to sign mid- and long-term contracts for power and coal and "give full play to the medium- and long-term coal contracts to stabilize the market". read more Coal supplies at China"s major power plants have increased sharply since Oct. 5 and reached 95.69 million tonnes on Oct. 24, the NDRC said in a separate statement on Monday. That is up 17 million tonnes from end-September and enough to last 17 days. It also said it had dispatched teams to state-run utilities including China Huaneng Group and China Datang Corp to check up on efforts to boost coal supply. Mines belonging to these companies with the potential to safely increase production should do so as soon as possible, the NDRC said. The China Coal Industry Association on Monday also urged member companies to boost output while ensuring safety, to guarantee supplies during winter, to promote "rational" coal prices, to execute medium- and long-term contracts, and to sign 2022 contracts in advance. Climate campaigners are hoping China, the world"s top miner and consumer of coal and the biggest emitter of greenhouse gases, can be persuaded to start cutting coal consumption earlier than its target of 2026, but severe energy shortages have put the government under pressure to step up production of the fuel. read more China is pushing miners to ramp up production and is increasing imports so power stations can rebuild stockpiles for the winter, but analysts say shortages are likely to persist for at least a few months. read more The NDRC has taken a slew of measures and has said it was studying ways to guide prices back to a "reasonable range" and to crack down on "excessive profits" at coal firms. read more China"s securities regulator last week asked futures exchanges to raise fees, restrict trading quotas and crack down on speculation. ($1 = 6.3841 yuan renminbi)

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