China’s top planning agency has backed away from the production curbs that caused a huge squeeze in the coal industry last year, vowing to adopt more market-friendly measures in coal mining and other oversupplied industries.
The National Development and Reform Commission still plans to cut 150m tonnes of coal mining capacity this year. But it said it would leave the size and timing of the cuts to local governments if prices remained stable.
Beijing’s top-down restriction on state mines’ operating days — the number that miners could work in a year was cut from 330 to 276 — along with private mines closed by poor margins caused a supply shock and sudden price spike in the second half of last year. Benchmark thermal coal prices in Asia more than doubled, reaching more than $100 a tonne. It did not specify price levels but analysts believe it has set a floor of about Rmb535 a tonne, which equates to $70 a tonne for international traded coal.