China has announced that it would place limits on coal output until the end of March next year. The decision was made despite the rise in coal prices due to limited supply. The move is likely to curb the speculative practices in the market.

The National Development and Reform Commission (NDRC) announced on Wednesday that the output limitation has been extended by three months. Xu Kunlin, vice secretary of the NDRC, said, "The current increasing price of coal will not dampen the determination to cut coal capacity." He added that the current coal price level is not sustainable.

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Thermal coal is currently commanding $110 a ton price while coking coal is selling for $300 a ton. Both prices have seen a steep increase in the past months. In response to the price increase, the NDRC relaxed its output limitation which required mines to operate only 276 to 330 days a year.

However, 800 mines have been given permission to increase their working days. The move will help increase the supply of coal in the market.

The NDRC is also looking to manage prices by negotiating with coal companies. It recently announced that two top coal mining companies have agreed to supply coal to a utility company at price quarter below the current spot rate. The NDRC has increased its interaction with coal miners as it is scheduled to gather for another meeting this Friday.

China took another step to control speculation in the coal segment as its three prominent commodity exchanges increased their margin and fee requirements. These hikes have made it more expensive to trade in various materials including coal. 

Tagscoal, china, The National Development and Reform Commission