Market orinted thermal coal prices

China issued a guideline on Tuesday that thermal coal prices will be set by the market next year, rather than by the government previously.

The State Council, China's cabinet, said in the guideline that coal miners and power companies can negotiate thermal coal prices on their own beginning 2013.

Compulsory thermal coal supply contracts require coal miners to provide thermal coal to power plants at preferential prices set by the government until now.

However, according to the guideline, this will also come to an end next year.

The country will step up the construction of both regional and national coal trading marketplaces.

Since the 1990s, China has implemented government-guided prices for thermal coal in an effort to ensure steady power supplies.

But this led to unfair competition and conflicts between coal miners and power plants.

Experts said the market-oriented reform of the sector will set an example for similar reforms in the energy industry...

...As coal accounts for about 70 percent of China's primary energy production and consumption.