A vessel docks at Huanghua port, North China's Hebei Province to load coal in December 2021. Photo: cnsphoto

The National Development and Reform Commission (NDRC), China's top economic planner, said it plans to set standards that would define price-gouging in the coal sector, in the latest move to crack down on illegal activities and stabilize the coal market. 

The commission has summoned major coal enterprises to a meeting in Beijing, it will formulate rules and push relevant departments to step up enforcement in a bid to stabilize coal prices and ensure energy security, the NDRC said in a statement on its website.

Following the announcement, Chinese coal-related stocks dropped 3.36 percent on average on Monday, with Henan Dayou Energy Co, Anyuan Coal Industry Group Co and SDIC Xinji Energy Co closing down by the daily 10 percent limit.

The move is the latest effort by the Chinese authorities to rein in surging coal prices while avoiding any potential impact on the nation's economy amid volatile global supplies, Guan Dali, an energy analyst at the First Futures, told the Global Times on Monday.

Domestic coal prices have stayed high despite a retreat from the record high of 1,640 yuan ($257.3) per ton in October 2021, mainly due to production capacity restrictions and COVID-19 resurgences in the country.

Among the measures taken to ensure stable supplies and prices of the fuel, the NDRC in March urged coal producers and buyers to fulfill at least 80 percent of the medium- and long-term coal contracts they have signed.

"All the measures taken by the NDRC show that the authorities hope to make coal prices more stable, which is of crucial importance to the domestic economy, because coal will remain as a major source of energy for China in the coming five to10 years," Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, told the Global Times on Monday.

Lin said that if coal producers earnestly implement the requirement of filling 80 percent of contracts each month in the long run, there is no doubt that prices can be stabilized. 

On Friday, the Shaanxi Provincial Development and Reform Commission said in a notice that some coal miners in the province are reluctant to produce due to price caps, resulting in a low percentage of medium- and long-term contracts. 

It urged earnest implementation of the NDRC's requirement, with incentives including the release of advanced production capacity, priority in cross-provincial transport and coal resource guarantees.

China continued to step up coal output in March, with major coal production areas expanding capacity to increase market supply. Data from the National Bureau of Statistics (NBS) showed the country's coal output increased 14.8 percent year-on-year to 396 million tons last month, with daily production at 12.77 million tons.

Due to fast growth in domestic supply, the country's coal imports stood at 16.42 million tons in March, plunging 39.9 percent year-on-year, according to the NBS.

"The authorities are expected to come up with more measures to stabilize coal prices, like increasing production capacity," Guan said, noting that coal prices may keep falling for the rest of 2022.