China coal futures extend plunge after signs of govt intervention

Workers unload coal at a storage site along a railway station in Hefei, Anhui province October 27, 2009. REUTERS/Jianan Yu
  • Zhengzhou thermal coal down 11% at start of night session
  • Prices now down 20% from all-time high touched on Tuesday
  • Dalian coking coal falls more than 10%, coke more than 8%
  • Securities regulator calls for tighter controls on trade

BEIJING, Oct 20 (Reuters) - China's thermal coal futures fell the maximum 11% at the start of Wednesday's night session on the Zhengzhou Commodity Exchange, extending a plunge triggered by possible government intervention in prices 24 hours earlier.

The National Development and Reform Commission (NDRC), China's state planner, had said on Tuesday it was studying ways to intervene in record-high coal prices, amid a deepening power supply crunch, and would take all necessary measures to bring them back to a "reasonable range." read more

The statement alone sent thermal coal down 8% in Tuesday's night session, which is part of Wednesday's trading day.

The continued drop on Wednesday night means the price of the most traded thermal coal futures contract is now down almost 20% from the record high of 1,982 yuan a tonne touched on Tuesday.

It is still up more than 200% year-to-date amid tight supply. China is the world's biggest producer and consumer of coal, its main power generation fuel, and has been increasing output to meet demand.

On the Dalian Commodity Exchange, futures for steelmaking raw materials coking coal and coke dived more than 10% and more than 8%, respectively, at the start of Wednesday's night session.

The NDRC said on Wednesday it had sent teams to two major coal ports, Qinhuangdao and Caofeidian, both in China's top steelmaking province of Hebei, to supervise coal supply and price stabilisation.

It also sent a team to a coal storage and distribution trader centre in Hebi, in central China's Henan province, where NDRC officials emphasised the need to crack down and "publicly expose" speculation on the coal spot market, an NDRC statement said.

China's securities regulator also waded into the government's campaign against high coal prices on Wednesday, calling on futures exchanges to raise fees and restrict trading quotas.

The Zhengzhou exchange on Wednesday raised transaction fees for thermal coal futures contracts and restricted some trading positions for the second time this week.

($1 = 6.3913 Chinese yuan renminbi)

Reporting by Beijing Newsroom; Writing by Tom Daly; Editing by David Evans, Andrea Ricci and Sandra Maler

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