The Chinese government is reported to be soliciting opinions over schemes to set up a new power coal pricing mechanism for a full marketization of the fuel in China.

The National Development and Reform Commission, China’s leading economic planning body, has put forward new schemes to replace the existing system dating back to the planned economy with mid to long term contracts

Under the new system the settlement price is negotiated by suppliers and users, sources have reported. China has implemented a double-track coal pricing system for quite some time now, with the contract based and the market based coal pricing.

Contract based power coal is generally found to be approximately CNY 200 per tonne cheaper than the market price.

Annual contracts, which obligate coal suppliers to sell large quantities of thermal coal to power plants at preferential prices, are done so in order to ease the financial pressures faced by power producers.

Source - en.sxcoal.com

(www.coalguru.com)