BEIJING - China coal futures fell 8% to their downward limit in night trading on Tuesday as the country's state planner said it was studying ways to intervene in record high prices for the fuel.
The most traded thermal coal contract on the Zhengzhou Commodity Exchange CZCcv1 , for delivery in January, fell to 1,755.40 yuan ($275) a tonne, having touched an all-time peak of 1,982 yuan in Tuesday's daytime session amid a widening power crunch and the onset of cold weather.
A shortage of coal, China's main fuel for power generation, has led to electricity rationing for industry in many Chinese regions and curbed GDP growth in the world's second-biggest economy.
The 8% drop in thermal coal futures was the steepest plunge since August, although prices are still up some 260% year-to-date.
The drop occurred at the start of the night-time session in Zhengzhou as the National Development and Reform Commission (NDRC) said it was studying ways of intervening in high coal prices and would take all necessary measures to bring them back to a reasonable range.
"The current price increase has completely deviated from the fundamentals of supply and demand," the NDRC said after calling a meeting of key coal producers, the industry association and the China Electricity Council.
"The heating season is approaching and the price is still showing a further irrational upward trend," the commission added.
Chinese law allows the government to limit profit rates and set price limits, the NDRC said, vowing to crack down on any irregularities and maintain market order. ($1 = 6.3830 Chinese yuan renminbi)
(Reporting by Beijing Newsroom; Writing by Tom Daly; Editing by Alison Williams and Jonathan Oatis) ((firstname.lastname@example.org; +86 10 5669 2119;))