During Power Shortage, Coal Price Control... Strong Market Intervention

Balgae Committee Applies Article 30 of China's Price Law, Takes All Necessary Measures According to Law
Warns of 'Zero Tolerance' for Illegal Acts Such as Spreading False Information, Price Collusion, and Hoarding

[Asia Economy Beijing=Special Correspondent Jo Young-shin] The Chinese government has pulled out the card of controlling coal prices. As power instability continues with coal prices soaring to unprecedented levels, it appears to have taken the drastic step of market intervention.

According to Chinese economic media Caixin on the 20th, the National Development and Reform Commission (NDRC) convened officials from the China Electricity Council, China Coal Industry Association, and major coal companies the day before, conveying its intention to clearly intervene in the market according to the law.

Photo by Global Times capture

The basis for coal market intervention is Article 30 of the Chinese Price Law. This law allows the State Council and provincial, autonomous region, and municipality authorities to introduce price increase reporting systems and restrict prices when prices of major goods and services rise sharply or are likely to rise sharply.

The NDRC stated that coal is an important basic national energy source and that it can take all necessary measures stipulated by relevant laws. The NDRC further emphasized that since coal is closely related to the national economy and the lives of the people, it will ensure a stable energy supply.

In particular, the NDRC warned that it will strictly crack down on illegal activities such as spreading false information related to coal, price collusion, and hoarding, applying a "zero tolerance principle" if detected.

Caixin reported that upon the announcement of the authorities' coal price control policy, coal futures prices plunged by 8% that day, trading at 1,755.4 yuan per ton.

Yulin City in Shanxi Province, China's largest coal-producing region, also took emergency price restriction measures from 6 p.m. that day, limiting state-owned coal mines to no more than 1,200 yuan per ton (under medium- to long-term supply guarantee contracts) and private coal mines to no more than 1,500 yuan per ton. As of the 15th, the trading price of thermal coal (6000 kcal) produced in Yulin City was 1,810 yuan per ton, up 19.87% compared to the previous week.

Caixin forecasted that the authorities' coal supply expansion policy alone was insufficient, stating, "With the implementation of price restriction measures alongside coal supply expansion, coal prices are expected to stabilize."