coal Photo:VCG
Coal futures and stocks in China plunged on Wednesday as the government weighs policies to intervene in the coal market to rein in rising prices and guarantee winter heating.
Major future contracts of coking coal, coke and thermal coal fell by the limit on Wednesday, after plunging in overnight trading.
The most-active thermal coal contract on the Zhengzhou Commodity Exchange traded 8.01 percent lower on Wednesday. The most active coking coal and coke future contracts on Dalian Commodity Exchange fell as much as 8.99 percent.
The sharp decline in coal futures dragged down other cyclical stocks over concerns of a market correction.
Coal stocks plunged with more than 20 stocks falling by over 9 percent. Shares in natural gas, cement, steel and chemical sectors also weakened, with Inner Mongolia Yuan Xing Energy, Zhongman Petroleum and Natural Gas Group, Guanghui Energy and Chihong Zinc and Germanium among those suffering the largest drops.
The market sell-off followed China's top economic planner, the National Development and Reform Commission (NDRC) vowing to use all necessary means based on price law to intervene in coal prices.
NDRC said on Tuesday night said that coal prices have become completely detached from the fundamentals of supply and demand and that it will make full use of all necessary means stipulated in the Price Law to intervene in coal prices, to ensure the security and stable supply of energy and heating in the winter.
