Energy crisis forces China to control coal prices

Energy crisis forces China to control coal prices

/ Energy & Power / Thursday, 21 October 2021 09:16

In a bid to relieve increasing pressure on the country's economy, China has pledged to reduce soaring coal prices even as it increases its production. The country has made commitments to reduce fossil fuel emissions.

Energy crisis has slowed China’s economy in the third quarter, according to official data, with electricity shortages and production cuts dragging industrial output.

The National Development and Reform Commission (NDRC) has said that it is looking for ways to intervene in coal prices, which have risen rapidly to record high levels.

"The current price increase has completely deviated from the fundamentals of supply and demand," it said, pledging to have prices return to a "reasonable range". It warned authorities would take a "zero tolerance" approach and "severely crack down on" activities like spreading false information or price collusion.

The NDRC has stressed coal mines should aim for more than 12 million tonnes in daily output, with local authorities to ensure production is maximised.

The surging price of coal and supply shortages, both factors behind recent power outages in China, have fanned concerns about global supply chains.

A production snarl in China could hit global exports and bump up prices at a time when factory price inflation is already high.

Meanwhile, the country's thermal coal futures fell in overnight trading.

Close to 60 percent of China's economy is fuelled by coal, and it has pledged to become carbon neutral by 2060. China has been experiencing widespread power cuts recently which has forced factories to delay production as businesses have been ordered to minimise energy usage. Mines have been ordered to expand coal production, while top state-owned energy firms must ensure adequate fuel supplies at all costs.

According to state news agencies, local governments have also been taking action, with coal port Qinhuangdao reaching an agreement with miners, power plants and railway operators to cap some supplies costs. China's coal inventories stand at 88 million tonnes, enough to last 16 days, according to the NDRC.

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