Acknowledging that there was no relation between supply and demand and coal prices, Chinese authorities moved to curb speculation on the Zhengzhou Commodity Exchange yesterday. As a result, coal prices plunged by the maximum of 8% for two days in a row.
“The National Development and Reform Commission (NDRC) said that coal prices have become completely divorced from the fundamentals of supply and demand and as the heating season approaches, prices are still showing a further trend of irrational rises,” Global Times reported Oct. 19
On Oct. 19, the NDRC gathered coal enterprises and industry associations to study ways and means to intervene. At the same time, it sent a team to the Zhengzhou Exchange, where a symposium was held. “Price moves of thermal coal futures since the start of the year were analyzed at the symposium, which concluded with a stern crackdown on malicious speculative bets on thermal coal futures.” A daily maximum change of 10% was announced. After this series of “policy combinations punches” were issued, the capital market moved in response and the coal futures market and the stock market fell simultaneously.
