It's no doubt that draft measures recently released by the National Development and Reform Commission (NDRC) to ensure coal supply and stabilize prices is one hot topic in China's coal industry.
The country's top economic planner issued a draft document on August 28, asking utilities to maintain coal stocks at certain levels. The document also stipulates stocks ceiling and bottom lines at coal-related firms.
"The policy surly can help prevent coal prices from great fluctuations," said Xing Lei, a professor from the Central University of Finance and Economics.
"It's perhaps not a good thing to have too many stocks," he said. "It costs money and needs more space; there are dust pollution and potential safety hazards as well."
An expert from Xiamen University agreed that the policy can help prevent coal prices from large fluctuations, otherwise, the prices may seesaw severely and frequently.
But he reminded that relevant parties should effectively implement the policy, as it's hard to supervise whether enterprises do so when prices are rising.
An analyst said sufficient coal supply is of vital necessity in carrying out the stocks-related policy and stabilizing the prices. "If daily output on average in the country can't reach 10 million tonnes or above, the policy help little in curbing fast price rise within short time and even can push up prices, " he added.
Considering it's now the end of summer coal consumption peak and still far from pre-winter restocking time, the government will constantly press on coal mines to extend production, as an effort to unload part of price pressures in the coming winter.
(Writing by Alex Guo Editing by Harry Huo)
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