Research On The International Pricing Power Of Coal Energy In China

Coal will continue to be China‘s long-team energy source due to the lack of oil and gas,and the fact that new energy cannot permeant replace fossil energy so far.However,the urgent need of resources and environmental protection has caused China to import these resources from other countries,and it‘s became a norm.For many years,China has been the world’s largest importer and exporter of many large commodities,however,China’s lack of international pricing influence in the international trade of many large commodities has long been marginalized by the international commodity pricing system,and China has paid a bitter price for this.In order to ensure the effective supply of energy,exploring China’s coal energy pricing power,and further grasping the current status of China’s international coal pricing power has important practical significance for China’s economic development.However,this issue has received less attention in the existing research.China will have to premise for coal market power since it will continue to have a large demand for coal in the future,as a result,it is necessary to discuss this situation under the China‘s economic development trends.China would have a certain degree of market powder in the international market by having a large amount of coal imports,but this issue has not been fully explored.In addition,it is necessary to analyze the various relationships between futures market price and the spot market price,and the price of China’s coal futures and other major international coal trading centers,in order to comprehensively examine whether China also has pricing power on the futures market.This article combines historical and current empirical facts,sorts out related theoretical foundations and empirical literature,conducts qualitative and quantitative research on the above aspects,and gives corresponding policy recommendations based on the research conclusions.The research work of this paper has reached the following conclusions:First,a spatial econometric model was used and incorporated with the environmental Kuznets curve to reforecast the peak demand for coal market,and to examine China‘s actual need and to increase market power in international coal energy market.I use coal consumption EKC curve spatial measurement model and panel data to estimate the coal demand inflection point from 30 provincial administrative regions in China from 1994 to 2016.In additional,I use China‘s total coal imports from 1985 to 2016 to construct an ARMA model and run regressions to make reasonable predictions of future tread on China‘s coal imports market.Two estimations were made on China‘s future coal demand treads;first,the average annual GDP growth rate is 6.5 percent from 1985 to 2016,and I predict this rate will continue in next 30 years,then 2037 will be the coal demand decline turning point.Second,China‘s coal imports will keep increase in the next few years.As a result,it is urgent to actively study the status of Chinese coal market pricing power at international coal market because the fluctuation of coal prices will directly affect the stable development of the national economy and national energy security.Second,I analyze the changes in China‘s coal import and export trade structure from the perspective of spot market,and the competition relationship between China‘s major coal importing and exporting countries and the countries that doing the business in China.I used coal market as panel data and PTM model to estimate China‘s market power on coal import and export.The result shows in the coal imports market,China shows market power in Australia,Indonesia,Malaysia,the Russian Federation,and Vietnam and these are major countries that China importing coal from.In addition,China has no coal market power in Mongolian and the United States.In addition,China‘s five major coal export markets,there is market power only shows in South Korea,but no market power in Hong Kong,Japan,Turkey,Taiwan,and Japan.Third,I established models and use empirical study to estimate the relationship between coal futures market and spot market price,to determine whether the price discovery function of the coal futures market would able to guide the spot market price.I also construct a theoretical model of pricing efficiency from the perspective of financial markets.The pricing efficiency of the futures market includes pricing efficiency and information efficiency.Pricing efficiency can be defined as the price discovery function of the futures market,that is,the futures market’s role in guiding spot prices over the same period.Only under the premise of effective pricing,the futures market can fully exert its price transmission function.I use cointegration test,Granger causality test and the generalized spectrum analysis method to test the pricing efficiency of Qinhuangdao thermal coal spot in Zheng zhou thermal coal market from 2014 to2019,I prove that China’s thermal coal spot price and thermal coal futures prices affect each other,and China’s coal futures market has a price discovery function,and then I am able to conduct further research.Lastly,I compare the price influence of China’s coal futures market with the European ICE Richard Bay coal futures market and ICE Rotterdam coal futures market,to draw some main conclusions and policy recommendations.I Construct a theoretical model of price transfer from the perspective of the financial market and use the VAR model to empirically analyze the effect of price transfer on futures.I choose ICE South Africa Richard Bay Coal Futures,ICE Netherlands Rotterdam Coal Futures,and China Zhengzhou Thermal Coal Futures as my research variables,I use cointegration test,Granger causality test and generalized spectrum analysis methods to analyze the daily data of futures prices from 2013 to2019,empirical result shows that there is a long-term equilibrium relationship between China Zhengzhou Thermal Coal Futures Market and ICE South Africa’s Richard Bay Coal Futures Market,in addition,ICE South Africa’s Richard Bay coal futures market has a greater impact on China’s Zhengzhou thermal coal futures market.There is a long-term equilibrium relationship between China Zhengzhou Thermal Coal Futures Market and ICE Netherlands Rotterdam coal futures market,in addition,China Zhengzhou thermal coal futures market has a greater impact on ICE Netherlands Rotterdam coal futures market.Furthermore,China‘s coal futures market has no international pricing influence.This paper contributes three policy recommendations.First,Integrate and improve China’s coal industry chain and standardize the spot coal market;second,encourage enterprises to be alliances and strive for international price negotiation power;third,improve the Chinese coal futures market,participate in international coal pricing,form an authoritative international coal benchmark price,and actively build a global coal pricing center.Three innovations were contributed in this paper.First,the innovation in research methods;spatial factors were ignored when using logic and Gaussian curves as research method,this paper reasonably incorporates the EKC curve with cubic terms into the spatial measurement model and uses it to predict the peak coal demand(inflection point).Because of the lack of studies on the impact of economy growth on coal demand,I introduce and verify the empirical hypothesis of EKC.When I combined the research of EKC and spatial measurement;or not directly related to coal consumption demand;or replace the inverted N-shaped relationship between economic growth and dependent variable in EKC with a simple inverted U-shaped relationship,the estimations and predictions were robust.Second,the innovation of a research perspective,from spot and futures market to measure China‘s pricing power in the international market.Related research usually only focuses on the pricing power of a single market in the spot market or the futures market but ignores the interaction between them.In order to measure the impact of China‘s coal energy pricing power on international market,this paper use market power theories and econometric methods,tested whether China has market power in the spot coal market;analysis the impact of China’s coal futures market on other countries‘ futures markets;and analysis the interaction between coal spot price and futures price.Third,the research innovation in content.Western developed countries have abundant substitutes for coal resources or have trading center prices around coal-related financial products,there is relatively little research on coal pricing power,while Chinese scholars mostly focus on energy fields such as oil and natural gas.This paper starts a direct study of China’s coal pricing power,which is a useful supplement to the literature on energy pricing power and also provide a reference for solving practical problems for China’s energy structure.