Coal stocks surge on press reports that contract prices will rise 4%
Local press have reported that China's Development and Reform Commission will raise the price of coal used for power generation by 4 percent in the latest chapter of the stand-off between generators and miners. The news was published by the 21st Century Business Herald, without identifying sources.
The State Council Research office is still working on the plan to solve the conflict between coal miners and power generators, who are unable to agree a price for coal contracts. Power generators are said to have compromised several times since the Chinese new year having given up their initial request for a lower contract price than last year. Coal miners have yet to respond.
The coal contract price demanded China Shenhua Energy Co. (SH:601088; HK:1088) was RMB 468 per ton last year. The price would be RMB 486 after an increase of 4 percent, far from the RMB 540 that the company has been insisting on so far.
Coal shares rose 6.34 percent on average. China Shenhua Energy Co. advanced 5.7 percent on Shanghai and 2.18 percent on Hong Kong. Huolinhe Opencut Coal Industry Co. (SZ:002128) and Shanxi Lu'an Environmental Energy Development Co. (SH:601699) surged to the 10 percent trading cap.
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