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China sets thermal coal prices for 2022 at between US$86/t and US$133/t

The National Development and Reform Commission (NDRC) of China has proposed to set annual thermal coal prices for 2022 at between CNY550/t and CNY850/t (between US$86/t and US$133/t). The annual thermal coal prices will concern all coal producers with an approved production capacity of at least 0.3 Mt/year, and power generation and heating companies. The 2022 benchmark (average price) is set at CNY700/t (US$110/t), significantly higher than the 2017-2021 benchmark of CNY 535/t (US$84/t).

In October 2021, the country unveiled a plan to make coal-fired power prices more flexible by allowing them to fluctuate by up to 20% from base levels in a bid to thwart high energy consumption. For energy-intensive industries, the price-setting mechanism will be liberalised and will be set by market transactions, and price adjustments will not be limited to 20%. Coal-fired power prices were previously allowed to rise by 10% and fall by 15% from base levels. 

China aims for a 1.8% reduction in average coal use for power generation by 2035. Coal-fired power plants must lower their consumption rate to 300g/kWh of standard coal, compared to 305.5g/kWh in 2030. Coal accounts for 54% of China's installed capacity, with 1,200 GW, and for 64% of its power generation (2020).