China has managed to maintain prices of coal and electricity in reasonable ranges, playing a significant role in ensuring steady economic growth, an official of the National Development and Reform Commission (NDRC) said on September 29.

Coal prices have been successfully controlled since "an abnormal surge" in September-October 2021, said Niu Yubin, deputy director of the NDRC's Price Department, in a press conference.

China have ever since introduced a price forming mechanism, in which prices of the benchmark 5,500 Kcal/kg NAR coal sold under term contracts are controlled within a range of 570-770 yuan/t at northern ports. Based on this, prices of spot trades for this grade are capped below 1,155 yuan/t, 1.5 times the upper limit of the range.

With the price regulation as well as other measures, China's domestic spot thermal coal prices were almost unchanged from the same period last year in the first half of September, compared to a 158% jump year on year in the Newcastle futures market, said the official.

She also compared increases in power prices between China and some western countries, where China's average end-user power prices only increased 10% year on year in the first half of September, while trading prices in the UK, France and Germany jumped by 3-9 times from the same period last year.

China has brought in a market-based mechanism for coal-fired power tariff. In most cases, the traded price is not allowed to exceed 20% of the benchmark price, but electricity sold to energy-intensive companies is not subject to the cap. This not only protects the profits of power plants, especially in times of high coal prices, but also keeps power producers from passing on excessive costs to end users.

(Writing by Alex Guo  Editing by Harry Huo)
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