Thermal coal futures on the Zhengzhou Commodity Exchange are now half of what they were one month ago, the Financial Times reports. They reached a high of Rmb 2,301 Oct. 19, and traded at 1,205 today. A Shanxi official said that provincial mines “have all confirmed that the 5,500-kcal thermal coal will not exceed Rmb 1,200 a tonne.”
In an apparent contradiction, the future price rebounded yesterday, in what Reuters sees as a reaction of traders to the National Development and Reform Commission (NDRC) concern that prices not fall too much. China thermal coal futures rebounded by nearly 9% on Wednesday after falling for 10 straight days, after the government indicated phasing down price intervention at a web-based conference meeting earlier in the day, traders said. Several traders with knowledge of the meeting told Reuters that traders took their cue from the meeting of the country’s top economic planner, the NDRC, which told miners and power plants a that prices should not fall too much, too fast. The planner stressed that prices in the long run will remain at a “reasonable’ level.”
Independent from the price target set by the NDRC, the development on the Zhengzhou exchange shows that governments can absolutely control prices, if they want.
