The  Chinese  government's  move  to  set a ceiling for domestic coal prices at Qinhuangdao 

Port was unlikely to have a significant impact on coal supply-demand fundamentals, however 

efforts to allocate more railway capacity to transport thermal coal amid strong winter demand 

could have some impact, market sources said Tuesday. 

China's Qinhuangdao Port was directed by the country's National Development and Reform 

Commission on  Monday  not  to  allow domestic 5,500 Kcal/kg NAR coal entering the port to 

trade above Yuan 750/mt FOB, effective immediately. 

NDRC  was also reportedly keeping stringent tabs on all deals at the port as it seeks to reign

 in rising domestic thermal coal prices. 

The  price  of  FOB Qinhuangdao 5,500 kcal/kg NAR coal has surged almost 30% in the past 

year to be  assessed  at  Yuan 770/mt  Monday,  S&P  Global  Platts  data showed, driven by 

strong demand and supply tightness in several producing regions. 

The government was also this week giving thermal coal priority over coking coal on railways 

in a bid to ease supply bottlenecks during a severe cold snap, a China-based trader said. 

"There are logistics issues that are hindering supply from keeping up with demand and that's 

why [coal] prices have gone up," he added. 

However  Luzheng  Future  coal analyst  Pu  Chengzhu  said  the  price  ceiling  set  by  the 

government will not impact supply-demand fundamentals and market conditions significantly, 

although near-term sentiment and confidence could be shaken slightly. 

Supply  remains  tight and stockpiles at utilities are low, he said, adding domestic coal prices 

may hover around the ceiling level for another one or two weeks, "but as Chinese Lunar New 

Year  is  approaching,  demand for coal has a high chance of dropping, especially during the 

holidays."