China Seen Targeting ‘Comfortable’ Coal Price by Managing Miners
- Output deal indicates ‘desired’ price 460 yuan a ton: UOB-Kay
- Newcastle prices gained as much as 40% this year on China cuts
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China is targeting a price range for thermal coal after output cuts led to a sharp increase in imports and prices, according to analysts from Citigroup Inc. and UOB-Kay Hian Ltd.
An agreement this week between regulators and miners to coordinate production shows that China’s “comfortable range” for Bohai-Rim coal is 450 to 500 yuan a ton ($67 to $75), Citigroup analysts including Jack Shang said in a report. The plan will see miners cut or boost output to keep prices within the desired range, according to UOB-Kay Hian. The Bohai-Rim index, which tracks thermal coal prices across six northern ports in China, was at 515 yuan on Sept. 7, while spot Newcastle coal advanced above $70 on Tuesday for the first time since March 2015.