(Yicai Global) Dec. 3 -- China plans to raise the benchmark price for long-term coal contracts next year, the country’s top economic planning agency said today, the first increase since they were introduced in 2017.

The National Development and Reform Commission has drafted a plan to set the benchmark rate for 5,500 kilocalorie thermal coal at CNY700 (USD110) a ton, up 31 percent from the previous CNY534. The NDRC is seeking public opinion on the plan.

The pricing mechanism of base price plus floating price remains unchanged, but will be adjusted monthly rather than quarterly. The price range for 5,500 kcal thermal coal would be between CNY550 and CNY850 per ton.

A long-term coal contracts are for 100,000 tons or more of the fuel and last for at least a year. They are the basis for long-term and stable supply and demand, and can ensure steady supply and prices.

The NDRC’s plan further expands the scope of coal contracts for next year, and coal producers with an approved capacity of 300,000 tons and above are included in the scope of signing in principle. Power generation and heating companies must sign long-term contracts for all coal consumption except for imported coal.

Editor: Peter Thomas