(Bloomberg) -- Coal futures extended a dramatic decline as China's government said there's further room for prices to fall, ratcheting up interventions in the market aimed at easing an energy crisis.
Production costs for coal miners are much lower than current spot prices for the fuel, meaning rates can continue to fall, the National Development and Reform Commission, China's top economic planning body, said Friday on its official WeChat account. The agency cited initial results from a survey of key companies in all producing regions.
The most-active thermal coal contract on the Zhengzhou Commodity Exchange fell 7.5% Friday to 973 yuan ($152) a ton, the lowest close since Sept. 10. Futures have slumped 47% since hitting a record on Oct. 19.
Yanzhou Coal Mining Co. fell 1% and China Coal Energy Co. declined 2.5% in Hong Kong as of 3:42 p.m. local time.
China's authorities are pressing coal producers to both raise output and lower prices to help address tight fuel supply that's prompted widespread shortages, seen power restricted for some heavy industrial users and left many utilities generating electricity at a loss.
The economic planning body is considering capping the price at which miners can sell thermal coal to alleviate pressure on power producers. China is also urging miners to deliver about an additional 100 million tons of the fuel by the end of the year to help meet winter demand.
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