Tuesday, November 08, 2016
China's coal price hike related to policy volatility
ANBOUND
In the month of November, coal price in China has been continuously increasing. Concerning this, the National Development and Reform Commission of China again has convened a meeting with coal enterprises. Anbound research team pointed out that the current coal price hike is a market behavior, and NDRC's attempt to lower the price by holding discussion is an act of market price intervention, which shows there is no significant progress in the approach of government regulation of the market. However, from the perspective of short-term policy, there would be problems too if the coal price hike is not curbed, therefore the Chinese government is forced to act. There are still a lot traditional industries in China, and these industries require more energy consumption; in addition to this, coal accounts for a large part of China’s energy consumption structure and its demand is very rigid. The changes of the economic cycle in addition to the industrial structural problem, as well as policy changes have caused fluctuations in market demand being amplified.