China has said 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.
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, “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, would summon index providers, and would punish any irregularities with measures such as suspension of publication or inclusion on a blacklist.
It did not name any of the information providers.
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.
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.
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 stabilise the market”.
Coal supplies at China's major power plants have increased sharply since October 5th and reached 95.69 million tonnes on October 24th, 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.
Impact on climate
Climate campaigners are hoping China, the world's top miner, consumer of coal and the biggest emitter of greenhouse gases, can be persuaded to start cutting coal consumption earlier than its target of 2026.
However, severe energy shortages have put the government under pressure to step up production of the fuel.
In 2019, 58 per cent of the country’s total energy consumption came from coal – explaining why China accounts for 28 per cent of all global CO2 emissions.
Ahead of Cop26, all eyes will be on China amid discussions about cutting global CO2 emissions.
Meanwhile, 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.
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.
China's securities regulator last week asked futures exchanges to raise fees, restrict trading quotas and crack down on speculation. - Reuters