Chinese major coal producers, including China Energy Investment, China Coal, Datong, and Yitai agreed to set a floor price on Monday to prevent the price from declining further. Producers have aggressively cut prices since early April due to oversupply and lower power demand. The floor price for NAR 5,500 kcal/kg coal was set at CNY485/ton ($68.54/ton) FOB North China ports for delivery over the rest of April. The floor price is higher than the last assessment of CNY474.67/ton ($67.08/ton) FOB Qinhuangdao on April 17.
Following the news, the September contract on the Zhengzhou commodity exchange rose to an intra-day high of CNY502.80/ton ($71.067/ton) before closing at CNY499.80/ton ($70.63/ton). On April 17, the contract was closed at CNY498.60/ton ($70.47/ton). Market participants expected the floor prices to support domestic coal prices after falling to their lowest since July 2016 on April 17.
The Coal Transportation and Distribution Association (CCTD) has urged domestic producers to reduce coal output to support prices and restore the market balance. CCTD also called major producers to stop dumping their supply in the market by giving discounts. However, two major producers said they had no plan to lower production. China's coal output reached 337.26 million tons in March, increasing by 9.6% from a year earlier, data from the NBS showed.
