Coal Price Fluctuations Research Articles

The asymmetric effect of coal price on the China's macro economy using NARDL model

The present work endeavors to explore the asymmetric effect of coal price on the China's macro economy by applying nonlinear autoregressive distributed lag (NARDL) model for the period of January 2005 to June 2015. The obtained results indicate that the coal price has a strong asymmetric effect on China's macro economy in the long-run. Namely one percent increase in coal price leads to 0.6194 percent of the China's macro economy increase; and while the coal price is reduces by 1 percent, the China's macro economy will decrease by 0.008 percent. These data indicate that when coal price rises, the effect on China's macro economy is far greater than the price decline. In the short-run, coal price fluctuation has a positive effect on the China's macro economy.

The impact of coal price fluctuations on China’s economic output

ABSTRACTDue to the important role of coal in China’s macroeconomic growth, the price of coal significantly influences its economic output. Employing a VAR model, a cointegration test and a state-space model of time-varying variables, this article analyses the influence of coal price fluctuations on the volume and structure of China’s economic output, including both the strength and the time delay of such influence. This article further explores the corresponding relationships between coal price fluctuations and variations in the effects of these fluctuations to analyse the asymmetric influence of coal price fluctuations on China’s macroeconomy. Coal price fluctuations exerted significant long-term positive effects and short-term negative effects on China’s output variables, with an average delay of 11 months; they had positive effects on investment and consumption over the long term and an increasingly negative effect on imports and exports. The average delays were 9 months for investment, 6.5 months for consumption and 10 months for imports and exports. There was an asymmetric correlation between coal price fluctuations and the time-varying elasticity of their impact on GDP. The results in this study are consistent with the actual operating circumstances of the Chinese economy.

Power supply, coal price, and economic growth in China

In this paper, we develop a coal–electricity vertical price transmission model for analyzing the relationships between power supply, coal price, and economic growth. We empirically test the model using data from 1996 to 2011. The results suggest that there is a long-run equilibrium relationship between power supply, coal price, and economic growth. Power shortages represent departures from this long-run equilibrium relationship. Applying a bootstrapped Granger causality test, we find unidirectional Granger causality from power supply to economic growth and from coal price to power supply, and bidirectional Granger causality between coal price and economic growth. We also discuss policy implications suggested by these results, including monitoring coal price fluctuations, perfecting the coal–electricity price linking system, and breaking the administrative monopoly in China’s electricity market.

Bridging Physical and Financial Business Water Risk: Watervar and Waterbeta Metrics for Equity and Portfolio Risk Assessment

The impact of water as a constrained resource for business operations is becoming part of the investor discourse on equity water risk. A key challenge is the absence of metrics that relate physical risk to financial risk, either at the company or at the portfolio level, resulting in the lack of asset risk pricing. Our research tests the hypothesis that water risk impacts revenue and the cost of doing business and, by inference stock volatility, unless the company manages its risk appropriately. We related stock volatility metrics and water risk exposures of four electric utilities during a two-year period (2007-2008) that captured multiple drought events, commodity (coal) price fluctuations, and systemic risk in the financial markets. Using waterBeta and waterVaR metrics, the impact of water risk on stock volatility (VaR) was highly dependent on the value chain position of the firm, the capital efficiency of water, and stock elasticity. WaterVaR values range from $5M for the Southern Company to $167M for AES. The use of financial risk metrics for water can improve decisions for asset allocation to reduce water risk exposure in portfolios, including stranded assets.

Inflationary effect of coal price change on the Chinese economy

This study investigates the pass-through effect induced by coal price fluctuations on the Chinese economy 2007–2011 based on a non-competitive input–output model. Three scenarios with different domestic tariff regulation alternatives, i.e., Actual Regulation (AR), No Regulation (NR), and Strong Regulation (SR), are simulated to reflect the effectiveness of different policies. At the sectoral scale, the Coking sector has the largest price variation under all scenarios while agriculture sectors and services sectors are the least sensitive. Nation-level impacts are examined by the weighted price changes of commodities used for different purposes. With the government regulation in reality, about 5% of the GDP deflator and CPI changes as well as 25% of the PPI change over the research period are attributed to coal price increase. Comparison shows the AR scenario brings more stable fluctuations but higher inflation than the NR scenario. The SR scenario confirms that authorities can remarkably relieve short-run inflation by controlling domestic electricity and heat tariffs. The induced inflationary expense sums up to between 0.03% and 0.97% of China’s GDP, around three quarters of which are burdened by investors and foreigners. The quantitative effect investigated in this study can serve as empirical evidence for policy makers regarding inflation control in China.

Study on Coal Performance Influence Based on Input-Output Model

As a basic industry, the coal industry has greatly associated with the development of national economy. The coal industry has a tight association with the development of national economy. This paper calculates the direct consumption coefficient and the complete consumption coefficient among coal industry and other national economy sectors in an input-output model based on the Input-Output Tables of 2007, and analyze the reaction of each sector to coal price fluctuation. The results show that most of the top ten are industry sectors, and the sector which is the most influenced one is industry of production and supply of electric power and heat power. If the coal price rises by 10%, this sector will accordingly rise by 1.79%.

Why do electricity utilities cooperate with coal suppliers? A theoretical and empirical analysis from China

The asymmetry of Chinese coal and electricity pricing reforms leads to serious conflict between coal suppliers and electricity utilities. Electricity utilities experience significant losses as a result of conflict: severe coal price fluctuations, and uncertainty in the quantity and quality of coal supplies. This paper explores whether establishing cooperative relationships between coal suppliers and electricity utilities can resolve conflicts. We begin with a discussion of the history of coal and electricity pricing reforms, and then conduct a theoretical analysis of relational contracting to provide a new perspective on the drivers behind the establishment of cooperative relationships between the two parties. Finally, we empirically investigate the role of cooperative relationships and the establishment of mine-mouth power plants on the performance of electricity utilities. The results show that relational contracting between electricity utilities and coal suppliers improves the market performance of electricity utilities; meanwhile, the transportation cost savings derived from mine-mouth power plants are of importance in improving the performance of electricity utilities.

Effects of coal prices on merchandise prices in China

Coal is the principal form of energy used in China. Hence, coal price variations are expected to have some influence on merchandise prices. Monthly data from January, 2002, to October, 2010, were used to construct a varying-parameter state space model, and an error correction model, to estimate the influence of coal prices on Chinese merchandise prices. The time lag and the dynamic relationship were determined from the data. A long term equilibrium relationship between coal price and the PPI, and the CPI, can be observed. The long term influence of coal price fluctuations on the PPI is 0.263%. The corresponding value for the CPI is 0.157%. The PPI shows an influence from coal price change in the first period of observation: by eight periods the influence is obvious, after which it diminishes. The effect of coal price change on the CPI is rather weak and has no long term memory. Analysis of variance shows a similar situation. The elasticity coefficient of coal prices on the CPI, or the PPI, fluctuates over the 2002–2004 period. From 2002 to 2007 the influence elasticity on the CPI declined and subsequently levelled off after 2009.

Research on the influencing effect of coal price fluctuation on CPI of China

Abstract The cointegration test, ECM model, impulse response function and other econometric methods are used in this paper to analyze the impact of coal prices fluctuations on the effectiveness of CPI and its delay impact. The results show that there is a long-term equilibrium relationship between coal prices and the CPI in China. The effectiveness of coal price fluctuations on the CPI is about 0.157% in the long run, and if the short -term fluctuations deviate from the longterm equilibrium, the model of coal prices and CPI will adjust from non-equilibrium state to equilibrium state by - 0.03. From the impact of delay, the fluctuation of coal prices does not have long-term impact on CPI: the first phase of the performance is not obvious, the strength of innovation impact shows then, and it reaches the peak in the third period. The results from the variance decomposition have got the similar conclusions. Based on the conclusions, several corresponding policy recommendations are put forward in this research.

Coal price fluctuations and the impact on financial risk—Evidence from China’s coal listed companies

Coal price fluctuations and the impact on financial risk—Evidence from China’s coal listed companies