Sxcoal Issue 32# | China 2025 power coal contract guidelines: easing reqmts while emphasizing quality
Check for a comprehensive comparison of the NDRC guidelines on mid- and long-term contracts between China's coal suppliers and power producers.
The National Development and Reform Commission (NDRC) issued guidelines for signing and fulfilling the 2025 medium- and long-term coal supply contracts between coal suppliers and power producers on November 20, introducing a series of adjustments to enhance flexibility and efficiency in the coal sector.
Among the key changes, the minimum ratio for coal enterprises signing into medium- and long-term contracts has been relaxed from 80% of their own resources to 75%, while the fulfillment rate been adjusted from an absolute 100% to no less than 90%, with provisions for force majeure events to be excluded from supervision.
The introduction of the China Power Coal Index into the pricing formula is expected to strengthen the correlation between the contract prices and spot prices at major ports, potentially leading to an increase in average selling prices for certain companies.
Quality control has also emerged as a critical component of the new guidelines. The NDRC mandates that all contracts must specify quality clauses, which will be subject to supervision. The principle of "premium quality at preferential prices, resisting low prices" is emphasized, with a mechanism for adjusting settlements based on coal quality differences.
It also encourages the adoption of a calorific value conversion coefficient, prompting the use of higher-quality coal. These moves will help reduce transaction costs and promote fairer trading practices between coal suppliers and power generators.
The new guidelines encourage the participation of national budget-funded coal reserve bases as third parties in contract signings. Additionally, the NDRC prioritizes power generation enterprises over coal producers regarding fulfillment quantity requirements.
These shifts not only reflect the government's intention to ease pressure on coal producers but also signal a more pragmatic approach to market regulation.
Sxcoal has prepared a detailed comparision for the guidelines on mid- and long-term contracts issued by the NDRC over the past three years.
Read it now HERE. It is free for registered members.
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