China’s ‘green zone’ coal price tested as virus fight continues

Bloomberg

China’s coal prices have sunk to levels that threaten state intervention, but this time policy makers may refrain from doing so as they continue efforts to buttress the economy hurt by the coronavirus pandemic.
The government will try to keep power prices low as it pushes to restart the economy, according to analysts. That goal will be helped by the decline in benchmark prices to just above 500 yuan a ton, the lower end of a range that Beijing generally tries to maintain.
“I don’t think the government will intervene too much as lowering energy costs could be one of the objectives during the Covid-19 period,” said Dennis Ip, an analyst at Daiwa Capital Markets Hong Kong Ltd.
China is the top user and producer of the fuel, and has sought to balance the needs of its power enterprises and miners by securing a “green zone” price of between 500 and 570 yuan. In the past few years, spot prices have mostly held above that range due to stricter scrutiny of local mines, elimination of old capacity and clampdowns on imports to spur demand for domestic coal.
This year, prices have fallen as new capacity ramps up.
With Beijing pushing to get the economy back up again after weathering the worst of the coronavirus outbreak, miners are urged to expedite output resumption.