NDRC: encourage coal supply and demand enterprises to carry out spot trading

The national development and Reform Commission today issued a circular on promoting the signing and performance of medium- and long-term coal contracts in 2020. According to the notice, relevant departments and enterprises in charge of production and transportation need to further standardize the signing of medium and long-term contracts, actively link up the transportation capacity, not to affect the normal power generation and heating and the demand for residential coal due to the connection, so as to ensure the stable and orderly supply of coal market. The notice also mentioned that coal supply and demand enterprises are encouraged to carry out spot trading through the national coal trading center, and use modern information means such as the Internet of things, cloud computing and blockchain to reduce transaction risks and transaction costs and improve market efficiency. The notice puts forward four requirements for promoting the execution of medium and long-term coal contracts in 2020. The first is to further standardize the signing of medium and long-term contracts and effectively improve the number of medium and long-term contracts.

Among them, the number of medium-term and long-term contracts signed by the central government, provinces, cities and other coal and power generation enterprise groups above designated size should reach more than 75% of their own resources or purchasing volume, with a reasonable increase compared with the level in 2019, and encourage new coal mines to sign higher proportion of medium-term and long-term contracts. Support the signing of medium and long-term contracts with complete price and quantity for 2 years or more. Encourage to sign more three-party medium and long-term contracts with capacity guarantee. At the same time, both sides of coal supply and demand are encouraged to sign medium and long-term contracts using the model text of coal medium and long term purchase and sale contract (2020 version). The second is to do a good job in the connection of transportation capacity and data collection and summary. According to the transportation capacity, the state railway group organizes and guides the relevant transportation enterprises to enter into the medium and long-term contracts of electric coal with annual single contract volume of 200000 tons and above, and the medium and long-term contracts of coal in metallurgy, building materials, chemical industry and other industries with annual single contract volume of 100000 tons and above transportation capacity connection.

The long-term contract volume of the three parties for production and transportation shall not be lower than that of the previous year. At the same time, to give full play to the railway's new coal transportation capacity, the three parties need to accelerate the convergence of production and transportation, and give full play to the role of the national coal trading center. Relevant departments and enterprises in all regions actively support the construction of the national coal trading center, give full play to the decisive role of market allocation of resources, encourage coal supply and demand enterprises to carry out spot trading through the national coal trading center, and use the Internet of things, cloud computing, blockchain and other modern information means to reduce transaction risks and transaction costs and improve market efficiency. The third is to adhere to and improve the medium and long-term contract price mechanism. Both sides of coal and power should continue to consult the pricing mechanism of "benchmark price + floating price" to determine the annual medium and long-term contract price through consultation.

In terms of benchmark price, the benchmark price of water coal contract shall be determined by both parties through negotiation according to the market supply and demand. In case of any inconsistency, it shall still be implemented at the level of 2019; the benchmark price of railway direct coal contract shall be determined comprehensively by the average price of mine mouth after deducting the freight and miscellaneous charges from the benchmark price of water coal and the monthly average transaction price of both parties in 2019, with the weight of two kinds of prices accounting for 50% respectively. In terms of floating price, the floating price of water coal contract and railway direct coal contract can be determined by combining the coal price index around Bohai Sea, cctd Qinhuangdao Port coal price index and China coastal power coal purchase price index. In addition, the regional contract pricing mechanism should also be determined by referring to the previous year's mechanism through consultation, and both the supplier and the demander are encouraged to price by referring to the price index issued by the regional trading center. In case of different opinions between the supplier and the demander, the local economic operation departments shall actively coordinate in line with the principle of marketization and legalization. The fourth is to improve the performance level of the contract.

Coal production and transportation enterprises need to strengthen the awareness of integrity. Once the contract is signed, it must be strictly performed. The quarterly performance rate of the medium and long-term contract should not be less than 80% and the annual performance rate should not be less than 90%. The national development and Reform Commission will strengthen guidance with relevant parties, focus on the supervision of the three parties' medium and long-term contracts for production and transportation, and conduct monthly statistics and quarterly assessment of contract performance. Relevant departments in all regions shall establish and improve assessment and evaluation measures for contract performance, and implement credit incentive and punishment for breach of credit in terms of approval of relevant projects of enterprises, adjustment of transportation capacity and credit restriction.