China's coal and electricity companies signed deals for a total of 1.87 billion metric tons of coal for 2013, an increase of 55.8 percent year-on-year, Beijing Business Today reported.
Analysts said the surge is due to the liberalization of the coal and electricity prices. Uncertain about the future price of coal, electricity companies are willing to purchase more coal. Coal producers are also willing to sell more coal as they are faced with rising stocks of the commodity.
In December, China's State Council decided to liberalize the prices of coal supplied to power plants in 2013.
Most power generated in China comes from coal-fired plants, which makes power producers heavily exposed to the prices of the commodity. In order to keep electricity tariffs stable, the government has asked coal suppliers for years to sell to power firms at contracted prices, which are far below market rates.
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