Recently, the National Bureau of Economic Development and Reform of the National Development and Reform Commission together with the Ministry of Railways Transport Bureau, the Ministry of Transport Water Transport Bureau, the China Coal Transportation and Marketing Association, and Zhongneng Power Industrial Fuels Corporation held a meeting to examine the performance of the 2010 Annual Coal Contract, Shanxi, Shaanxi, Inner Mongolia, Ningxia, The coal management departments and key coal companies in Xinjiang, Henan and other provinces attended the meeting.

A participant told reporters that at the meeting, the National Development and Reform Commission asked the local governments for economic operations, coal production and transportation departments and enterprises to take effective measures to effectively solve the problem of poor integrity and low liquidation rates in the performance of contracts.

Prior to June 25, the National Development and Reform Commission issued a notice requiring coal companies to comply with the annual contract coal prices this year. Coal companies that have already increased their prices will be returned before the end of June; state-owned coal companies and industry leaders should take the lead in maintaining market coal prices. Stability, can not take the lead in price increases.

An expert from the China Coal Transportation and Marketing Association told the reporter that at the time of the notification, there were not many companies that had increased their contract prices. "This is the key period for managing inflation expectations. The original intention of the NDRC to issue notices is to prevent the chain reaction caused by coal price fluctuations."

After the release of the price stabilization notice, the coal price in July has been declining, and the coal price has stopped rising. The effect of the policy is obvious.

"When the coal market is in tight supply, the failure to perform long-term contracts becomes a kind of inertia. If the state increases the intensity of policy implementation, the contract implementation rate will increase substantially," a person from the Shanxi Provincial Electric Power Association told reporters.

The National Development and Reform Commission has stipulated in previous price policies that for enterprises that have not been implemented in accordance with the contract, it will cut the plan for the capacity of key contracts in the next year and collect illegal income from prices.

However, the aforementioned participants stated that the above policy has not been strictly implemented. At the time of “coal shortage”, the rate of fulfillment of the contract was not satisfactory.

“Comparing to directly intervening in prices, the use of supervision of coal supply contracts to stabilise the market is a smart choice. Through institutional constraints, it is possible to ensure that the supply and demand sides share the market risk and prevent the market from experiencing large fluctuations.” Huang Teng, general manager of the company said.

In July 2008, the National Development and Reform Commission issued a “notice” that proposed that the maximum prices for thermal coal in major ports and distribution centers should be imposed. Limit the price of closed coal thermal coal in ports such as Qinhuangdao Port, Tianjin Port [9.10-0.33%], and Tangshan Port [7.91 0.25%], that is, the calorific value of 5500 kcal/kg thermal coal limit level is 860 yuan per ton*** (the same below), 840 yuan and 850 yuan.

"Even if the maximum price is agreed, coal companies have not strictly followed this. Coal companies can choose to use less coal, reduce coal quality, and sign supplementary clauses with customers to avoid policy supervision." Experts told reporters.

The industry believes that although the NDRC will focus its supervision on the performance of contracts, using the "Contract Law" and "Price Law" as the regulatory basis, this may not be effective.

“Many of the supply and demand contracts signed at the beginning of the year are priceless, or they are agreed to go along with the market. It is difficult to stabilize prices simply by fulfilling the contract. If the coal companies raise prices and the users receive the coal at the same time, both parties have already agreed to purchase and sell. The agreement also does not violate the "Contract Law." The said coal industry executives said.

The supply and demand contract stipulates that coal prices will follow the market, coal production companies have expectations of rising coal prices, and electricity companies have expected coal prices to decline. However, in the booming period of the coal industry, power companies often fail to do so.

The reporter learned from the interview that some coal mining companies may abide by the contractual agreement to ensure the quantity of coal and stabilize the price, but it does not rule out that the quality of coal will decline, and measures such as lowering coal calorific value and increasing water content will be adopted.

In fact, the coal contract fulfillment rate mainly depends on the quality of the coal market. The current supply and demand in the coal market is relatively stable and the coal price has declined slightly. Data show that from August 16 to August 22, the price of some coal mines in Shanxi Yanzhou and Datong regions was slightly reduced. Datong's 6000, 5800, and 5500 kcal caloric thermal coal prices were 620 yuan/ton, 595 yuan/ton, and 580 yuan/ton, respectively. The price of 4800 kcal thermal coal in Zhangzhou was 410 yuan/ton, compared with last week. Than the general drop of 10 yuan / ton.

Huang Teng, general manager of Beijing Changmao Consultation Co., Ltd. believes that in the current market environment, the contract execution rate will be relatively high, and NDRC contract inspections will surely advance smoothly.