China’s coal prices have sunk to levels that threaten State intervention, but this time policy makers may refrain from doing so as they continue efforts to buttress the economy hurt by the coronavirus pandemic.
The government will try to keep power prices low as it pushes to restart the economy, according to analysts. That goal will be helped by the decline in benchmark prices to just above 500 yuan a ton, the lower end of a range that Beijing generally tries to maintain.
“I don’t think the government will intervene too much as lowering energy costs could be one of the objectives during the Covid-19 period,” said Dennis Ip, an analyst at Daiwa Capital Markets Hong Kong.
China is the top user and producer of the fuel, and has sought to balance the needs of its power enterprises and miners by securing a “green zone” price of between 500 and 570 yuan.