National Development and Reform Commission: Coal mines and electric power enterprises plan to sign medium and long-term agreements

On the evening of October 31, a news from the media attracted extensive attention in the market. It is reported that the 2017 National Coal Fair will be held in Qinhuangdao, Hebei Province, around the end of November this year. The meeting will focus on the structural reform of the coal supply side, accelerate the construction of the national coal market system, promote the signing of medium - and long-term purchase and sales contracts between the coal supply and demand sides, make a good connection between production and transportation, stabilize the coal market expectations, achieve a reasonable level of coal prices, and promote the upgrading and development of the coal industry.
Particularly remarkable is that, under the active promotion of relevant government departments and industry associations, some coal enterprises and users have actively negotiated and communicated on medium and long-term purchase and sales contracts based on the common long-term interests in the near future, and preliminarily reached consensus on the coal order quantity, price level, transportation capacity guarantee, contract performance, and credit system construction. In particular, the price level is intended to make the basic contract price of 5500 kcal steam coal between 535 yuan/ton and 540 yuan/ton, which will fluctuate in the same proportion as the market price changes.
How will this intentional price affect the coal market in the near future? Will coal prices continue to rise irrationally? Reporters from China Reform News and Reform Network interviewed relevant leaders of the Economic Operation Regulation Bureau of the National Development and Reform Commission.
The person in charge said that the coal mine and the electric power enterprise planned to sign a medium - and long-term agreement, which is a major event in the standardization of the coal trading order, and also a combination of the major deployment of the supply side structural reform in the coal industry. It not only lays a good foundation for the production and operation of both the supply and demand sides, but also plays an important role in demonstrating and leading the signing of medium - and long-term contracts as soon as possible for more coal mines and users. At the same time, it also sends a clear signal to the current irrational rise in coal prices, which is conducive to stabilizing the market and supply, and is conducive to further promoting coal production capacity reduction and achieving development out of difficulties. It should be fully affirmed and actively supported in the work.
The person in charge believed that under the background of the recovery of coal production, transportation and inventory, the price rose irrationally away from the fundamentals, which aroused widespread concern in the industry. He believed that this trend was difficult to sustain, which was not conducive to the sustainable and healthy development of coal and related industries, and should promote the rational return of price through effective ways. At present, the signing of medium and long-term contracts between coal mines and electric power enterprises has multiple positive meanings and functions, which are embodied in four aspects.
First of all, the supply and demand parties carefully studied and judged the market trend, directly communicated and negotiated the contract, which better reflected the decisive role of the market in resource allocation, and the laws of the market economy were fully respected.
Secondly, it has achieved substantial integration with the international bulk material trading rules, which is more conducive to playing the positive role of two resources and two markets, and can also avoid daily ups and downs and mutual bulldozing.
Thirdly, both parties agree on a basic price on the price, on which basis they will adjust accordingly with reference to market changes. This basic price fully reflects the cost of coal mine production and the affordability of users, takes into account the interests and demands of both sides, and reflects the general law of market economy of market discovery price. In addition, the daily adjustment with the market changes reflects respect for the market, while effectively reducing differences and contradictions, and has strong enforceability.
Finally, although the coal and electricity parties have signed medium - and long-term contracts in the past, the implementation is not ideal, because the constraints are not strong and the cost of breach is too low. This time, the solemnity of the contract was specially emphasized, and it was clear that both parties should be honest and trustworthy. Any party who was not honest should be included in the dishonest list, or even blacklist. This will greatly improve the performance rate of the contract, which is very critical and also a historic progress.
The person in charge said that the Economic Operation Regulation Bureau of the National Development and Reform Commission would actively encourage and strongly support the supply and demand parties to sign annual medium - and long-term contracts. First, in terms of transport capacity, the commercial railway department is given priority to guarantee, which can better adapt to the characteristics of railway balanced production and operation, and improve the efficiency of transport capacity utilization.
Second, the relevant government departments will actively create conditions for contract performance. If the contract cannot be executed due to force majeure and other factors, they will help both parties coordinate resources and users to ensure that they will not suffer losses due to failure to perform the signed medium and long-term contracts.
Third, in promoting capacity reduction and production reduction, we should seriously consider the benchmark price of medium - and long-term contracts, promote the basic balance of market supply and demand by flexibly adjusting the intensity and pace of work, keep the price within a reasonable range as far as possible, not far from the benchmark price, and create good conditions for contract performance.
Fourth, strengthen the credit construction and credit supervision of relevant market entities. We will guide relevant market entities to improve their credit records, improve the joint incentive and punishment mechanisms for dishonesty, promote the honest operation of all contracting parties, keep their promises, and create a good social environment for strict implementation of medium - and long-term contracts.