China National Coal Group (China Coal) urged its subsidiaries to strictly comply with price caps set by the state planner and suspend sales to trading houses when spot prices rise beyond the ceilings, the miner said in a notice issued on May 11.
According to the giant miner, its transaction prices for term contract and spot cargoes should not float above 770 yuan/t and 1,155 yuan/t respectively from May 1, basis 5,500 Kcal/kg NAR thermal coal, FOB Qinhuangdao port with VAT.
Price limits for contracted and spot thermal coal from Shanxi, Shaanxi and western Inner Mongolia were set at 570 yuan/t and 855 yuan/t, 520 yuan/t and 780 yuan/t, 460 yuan/t and 690 yuan/t, all on a mine-mouth basis for 5,500 Kcal/kg NAR grade.
China Coal also said it will suspend sales of its own coal resources to traders once spot prices are higher than the upper limits, to ensure supply to end buyers only. Any consequences such as full stocks at warehouses or cargo backlog at ports due to sales restraints shall be dealt with coordinately.
If necessary, the mining company's product mix will be adjusted according to market demand and the company will re-arrange production based on actual sales.
Prices will be supervised by the company's Marketing Management Office, and any behaviors violating the price cap rules will be investigated and people involved will be summoned for talks, or held for accountability.
On May 12, the benchmark 5,500 Kcal/kg NAR thermal coal was mainly offered at 1,250-1,280 yuan/t FOB northern transfer ports with 13% VAT; prevailing offers for 5,000 Kcal/kg NAR thermal coal stood around 1,080-1,120 yuan/t, according to traders.
(Writing by Rebecca Liu Editing by Tammy Yang)
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