China intends to cap the price at which miners sell thermal coal in order to alleviate a power crunch that has resulted in electricity rationing and even a blackout in a major city last month.
According to sources familiar with the situation, Beijing wants to cap the price of its most popular 5,500-NAR grade coal at 440 yuan ($69) per tonne at the pithead. That price, which includes taxes, is a target rate, and there will be a 528 yuan absolute ceiling, said the sources.
The plan, which is scheduled to endure until May 1 next year, is awaiting approval by the State Council and may be amended.
The energy crisis that has engulfed the world's second-largest economy began in part as a result of increasing coal prices, which forced almost all of the country's coal-fired power plants to lose money. This month, Zhengzhou's benchmark coal futures hit a new high of over 1,980 yuan per tonne, while spot prices rose even higher.
According to the sources, Beijing also wants downstream sales prices to be regulated, however it will allow local governments to establish standards to limit the price of local coal trade. Coal importers will receive subsidies to balance their losses, the sources said.