Thermal coal saw wild swings in its prices this year. The prices surged earlier this year after Chinese government's announcement to curtail coal production by reducing operating days. The price level for Australian coal touched $100 a ton, the highest price in the past four and a half years.

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It is now reported that several major coal companies in China have entered into several long- and mid-term contracts for the purpose of stabilizing coal prices. These contracts have been signed with steel and power companies.

Shaanxi Coal and Chemical Industry Group Co Ltd, Heilongjiang Longmay Mining Holding Group Co Ltd, Yankuang Group, and seven other companies inked such deals at the coal trading conference held in Qinhuangdao, a major coal port in Hebei province, on Thursday.

Wang Xianzheng, president of the China National Coal Association said, "Mid- and long-term contracts will assure coal producers of their market share and coal consumers of the production resources, keeping the prices within a reasonable range."

The Chinese government implored domestic coal companies to enter into contracts with power companies at prices near $80 a ton mark. This price is below Asian spot rate for the metal. Consequent to such contracts, the market price for the coal tumbled down to nearly $90 a ton.

China is looking to curtail the production of coal to revive its industrial set up. However, the rate of price increase surpassed international price hike, forcing government regulators to ease production restriction. The increase in coal prices also lead to increase in electricity prices, elevating government concerns.

It has also been reported by Xinhua that China will suspend new coal mining and processing projects until the end of 2018. 

Tagscoal, china, Australia