Study On Price-setting Power Of China’s Coal Import

With the rapid development of China’s economy in recent decades, the energy consumption has increased dramatically. Because of China’s rich coal resources, for a long time coal is dominant energy in energy consumption. Recently, we realize the importance of energy security and environmental protection, our government turn to encourage import rather than encourage export. This change led to a decline in coal export and a surge in import. Till2009, China’s coal imports exceeded exports for the first time and China became a net importer country of coal. By2010China has surpassed Japan becoming the world’s largest coal import country, our export restrictions and imports encouragement policy led to a significant change in supply and demand forces on the international coal market supply and demand forces.Observing the world commodity markets of recent years, we can find an interesting phenomenon:once China buy one certain commodity, the price will rise up; once China sell, the price fall down."China factor" not only haven’t made us obtain the bargaining power, but also even be used by others. As the largest importer of coal, we need to learn from previous lessons, obtaining import coal’s price-setting power. Thus, it is very important to have a research on coal’s price-setting power.On the basis of analysis of the world’s and China’s coal trade, this thesis study the price-setting power of China’s coal import.This paper is divided into six parts.The first part describes the background and the significance of the topic and the achievements of previous research, introduces the research thinking.The second part consists of three sections, the first section describes the distribution of the world’s coal resources; Section two describes the main export/import country and trade flows in the world coal trade, expounds the entire coal market supply and demand situation from a global perspective; Section three describes the major international coal pricing mechanism. The second part describes the comprehensive background of China’s coal import, which act as the foundation for the coming analysis.The third part describes China’s imports situation and analyzes the reasons why import increase. Then introduce the main import sources&volume and continue with the characteristics of the import sources; and then use a method to measure the price-setting of China’s coal import, founding that China lack price-setting power.The fourth part we analysis the influencing factors of international price-setting power. In the first section, we introduce the impact of the characteristics of long-term,short-term supply and China’s coal demand on the pricing.In the second section,we analyze the monopoly of sellers and the competition of buyers firstly,then we use Game Theory to analyze the reasons why we lack of price-setting power.In the third section,we introduce the price-discovery function of futures markets and the current situation of coal futures market in the world and China, then analyzed the characteristics of China’s futures market and its significance for pricing-setting power.The fifth part analyzes the current problems,such as lack of reserves and foreign mining interests, centralizes source of imports, dispersed buyer power,futures market’s not international.On the basis of these analysis, we suggest that:to establish strategic reserves, to diversify import sources, to develop overseas resources, to establish buyer alliances and to improve futures markets.The sixth is conclusions. The supply and demand in the market is the foundation of price, therefore we should build strategic reserves, develop and diversify the overseas resources.In current situation the oligopolistic market structure can not be changed in the short term, we need to agglomerate the buyer’s power to fight for price advantage and get favorable price. In the long term, we should improve the futures market, make the global coal market become a full competitive market, eliminate the oligopoly suppliers’impact on the global coal prices and supply, accelerate prices return to be determined by supply and demand.