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Monday, 27 December 10
ANALYSIS: CHINA'S COAL PRODUCTION MISMATCHED WITH DOMESTIC DEMAND
 As reported by iStock Analyst, China's coal market has been trapped in a strange cycle. Large coal production bases are facing overcapacity, while large coal consumption provinces are in short supply of power coal.
This structural contradiction between supply and demand in China's coal market has highlighted heated discussions recently.
Coal producers facing mounting pressure of excess in output capacity
China is facing severe excess of production capacity and oversupply of coal in 2010 due to the expansion of coal production and surging imports amid sluggish demand, and this situation is expected to carry on into 2011 as new coal companies begin operation.
Wang Zhanjun, director-general of the China Coal (TSXV:CKO) Industry Association, said that China's coal supply capacity has seen a remarkable increase in 2010 due to the operation of newly formed coal companies after mergers and acquisitions.
In the first 11 months of 2010, the country's leading coal producing provinces and regions including Shanxi, Inner Mongolia, Shaanxi, and Ningxia all saw more than 20 percent growth in coal output.
According to a report by the association, in the first 11 months of 2010 China's coal output surged 15.5 percent or 418 million metric tons (tonnes) year on year to 3.039 billion tonnes, while coal sales were up 13.5 percent or 390 million tonnes to 2.892 billion tonnes. Coal deliveries increased by 15.3 percent year on year to 1.827 billion tonnes during the same period.
The investment in fixed assets in the coal industry has continued to increase this year. In the first 11 months of 2010, fixed assets investment in coal mining and washing saw 22.7 percent year-on-year growth to 320.7 billion yuan.
Meanwhile, China's coal imports keep rising while exports keep declining. In January-November, China's coal exports dropped 13.5 percent to 17.58 million tonnes, and are expected to remain low in December. Total coal exports are estimated at 19 million tonnes for the whole year.
In sharp contrast to declining exports, coal imports maintained fast growth in 2010. Net imports of coal are expected to reach 145 million tonnes in 2010.
However, China's coal demand has remained sluggish this year. Affected by the measures for energy conservation and emissions reduction, electricity consumption growth of high energy-consuming industries like ferrous metals, chemicals, non-ferrous metals, and building materials has fallen back quickly since May of 2010, which in turn has cut coal consumption severely.
Coal consumption in the steel industry moved from positive growth to negative growth in 2010.
According to official statistics, China's daily crude steel output saw fast growth in the first half of 2010 but registered three months of negative growth in the third quarter, and only increased 4.8 percent in November.
Also, coal consumption in the chemicals industry has also remained sluggish this year. According to preliminary forecasts, coal consumption in the chemicals industry in 2010 will stay at the same level as in 2009, at 140 million tonnes.
The China Electricity Council predicted that electricity demand in China would not increase much in 2010 and 2011, estimating the growth at 10 percent in 2010, 14 percentage points lower than in 2009.
Therefore, coal industry is expected to face mounting oversupply pressure in 2011 since the output of majority coal enterprises would double. Meanwhile, large numbers of coalmines in Shanxi, Henan, Shaanxi, and Inner Mongolia are scheduled to begin operation in 2011, and the coal oversupply will be aggravated by the participation of more downstream firms in power generation and metallurgy, said Wang Zhanjun, head of the China Coal Industry Association.
Wang predicted that coal supply in China would increase 300 million tonnes in 2011, and China would face excess in supply of coal.
Short supply of coal at power plants
In sharp contrast with the excessive output and supply of coal, a number of power plants in parts of China are suffering from shortages of power coal.
In Guizhou province, coal output capacity is significantly less than demand. The local coal output is expected to increase by 160 million tonnes at most in 2011, which would exacerbate the tight supply. This is because the output capacity of newly formed coalmines is inadequate to make up for eliminated production capacity, and the newly formed capacity will not come into operation until the second half of 2011.
At the same time, power plants in Guizhou cannot afford coal produced outside the province because of higher coal prices.
Similar short supply of coal has also occurred in Hubei province. Coal stocks at power plants in Hubei have remained at critical level since the beginning of this year, and sometimes were even not enough for one week's consumption.
The power coal shortage is not only a headache for power plants in non-coal production areas, but also hit power plants in major coal production areas like Shanxi and Henan.
Take the Datang Taiyuan Second Thermal Power Plant for example. The plant has suffered coal shortages four times since the beginning of 2010 because its contracted coal supplier supplied only 400,000 tonnes of coal towards meeting the 1.5-million-tonne coal contract.
As of December 4, power coal stocks of Henan have slid sharply from 3.84 million tonnes at the beginning of November to 2.65 million tonnes, far below the critical level of 3.5 million tonnes.
This has led to a daily supply shortage of 700,000 tonnes. Current coal production system might be primary cause
The short supply of power coal against excess of overall output capacity in China is believed to be caused mainly by system contradictions existing in the coal industry.
Actually, China's coal industry has trapped in a strange circle. Coal demand weakens after power plants stockpile power coal, but after the stockpiling, coal stocks of coal producers are down. Therefore, the coalmines produce more coal, which eventually leads to excess of output and excessive supply of coal.
Some coal suppliers have complained that if they carry on supplying coal according to their coal contracts with the power plants at the contracted price, the coalmines would all suffer (OOTC:WLVTQ) losses while the power plants all make profits.
A senior manager of the Shenhua Group said that it is difficult to avoid the structural contradictions of disjointed coal output and demand under the current government-capped management system. The outlook of China's coal industry remains troubled for 2011, and the problem of excessive output capacity would continue to be widespread in China, especially in western areas.
According to the manager, branches of the Shenhua Group in Xinjiang are all in the red due to heavy coal inventory pressure, while some provinces in east and south China are suffering from severe shortages of coal.
An insider with the Shanxi Coking Coal Group said that the group was ambitiously planning to double its output capacity during the period of the 12th Five Year Plan (2011-15), but the current market environment is very unfavorable for the coal industry. The cost of acquiring small coalmines has spiraled far beyond expectations.
Therefore, the mismatch between coal supply and demand at the turn of the new year is manageable, and the market is expected to see increasing supply and decreasing demand soon, noted the insider.
But Wang Xianzheng expressed disagreement. He believed that China's coal demand would increase by 200 million to 300 million tonnes in 2011. Besides which, the government-planned construction of 10 million units of affordable housing would drive coal demand by 60 million tonnes at least. Wang believed that the coal price would remain buoyant in 2011 but would not rise much.
Source: Quotemedia, Xinhua News Agency (Edited by Li Xiaohui), istockanalyst
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Wednesday, 31 January 24
CHINA'S INNER MONGOLIA COAL OUTPUT HIT 1.21B TONS IN 2023 - XINHUA
North China’s Inner Mongolia autonomous region churned out 1.21 billion tons of coal in 2023 as it strives to guarantee the country’s e ...
Wednesday, 31 January 24
GAS EXPORTS COST U.S. CONSUMERS MORE THAN $100 BILLION OVER 16-MONTH PERIOD - IEEFA
Limited Demand Growth Could Dampen the Dry Bulk Market in the Coming Months BIMCOStarting in late 2021—before its invasion of Ukraine—R ...
Tuesday, 30 January 24
LIMITED DEMAND GROWTH COULD DAMPEN THE DRY BULK MARKET IN THE COMING MONTHS - BIMCO
Demand
In our base scenario, we expect cargo demand to grow by 0-1% in 2024 and 0.5-1.5% in 2025. This is a 0.5 percentage point reduction for ...
Friday, 26 January 24
RED SEA DIVERSIONS ADD NEARLY A MILLION DOLLARS PER VOYAGE TO SHIPPING COSTS WHILE DOUBLING TRANSIT TIME - LSEG
The incremental costs of diverting a tanker from Asia to NW Europe via the Cape of Good Hope is accounting for an extra $932,905 USD per voyage whi ...
Friday, 26 January 24
HARD COAL GUARDIAN ANGEL OF THE ENERGY SUPPLY - GERMANY COAL IMPORTERS ASSOCIATION
- No security of supply without hard coal
- The Substitute Power Plant Provision Act (EKBG) must be extended
- Higher grid fees due to the ...
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- Siam City Cement PLC, Thailand
- Sical Logistics Limited - India
- Billiton Holdings Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Directorate Of Revenue Intelligence - India
- Coal and Oil Company - UAE
- Power Finance Corporation Ltd., India
- AsiaOL BioFuels Corp., Philippines
- Chettinad Cement Corporation Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Holcim Trading Pte Ltd - Singapore
- Eastern Coal Council - USA
- Cement Manufacturers Association - India
- Petrochimia International Co. Ltd.- Taiwan
- Ambuja Cements Ltd - India
- Bharathi Cement Corporation - India
- Parry Sugars Refinery, India
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- Simpson Spence & Young - Indonesia
- Indika Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- PowerSource Philippines DevCo
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- Eastern Energy - Thailand
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- Bangladesh Power Developement Board
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tata Chemicals Ltd - India
- The University of Queensland
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- Ministry of Finance - Indonesia
- GVK Power & Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- Barasentosa Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Lanco Infratech Ltd - India
- Oldendorff Carriers - Singapore
- Bhoruka Overseas - Indonesia
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Borneo Indobara - Indonesia
- Xindia Steels Limited - India
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- Energy Link Ltd, New Zealand
- Latin American Coal - Colombia
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- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Kumho Petrochemical, South Korea
- Krishnapatnam Port Company Ltd. - India
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Siam City Cement - Thailand
- Miang Besar Coal Terminal - Indonesia
- Indonesian Coal Mining Association
- Neyveli Lignite Corporation Ltd, - India
- Alfred C Toepfer International GmbH - Germany
- Karaikal Port Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Anglo American - United Kingdom
- Renaissance Capital - South Africa
- Salva Resources Pvt Ltd - India
- London Commodity Brokers - England
- Ministry of Transport, Egypt
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- CIMB Investment Bank - Malaysia
- Toyota Tsusho Corporation, Japan
- Edison Trading Spa - Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- Minerals Council of Australia
- Deloitte Consulting - India
- Energy Development Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Manunggal Multi Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Thai Mozambique Logistica
- Ministry of Mines - Canada
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- Mjunction Services Limited - India
- Larsen & Toubro Limited - India
- ICICI Bank Limited - India
- Orica Mining Services - Indonesia
- Singapore Mercantile Exchange
- Bahari Cakrawala Sebuku - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- Bhushan Steel Limited - India
- San Jose City I Power Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
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- Gujarat Sidhee Cement - India
- Bukit Baiduri Energy - Indonesia
- ASAPP Information Group - India
- India Bulls Power Limited - India
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- Iligan Light & Power Inc, Philippines
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- Global Green Power PLC Corporation, Philippines
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- Tamil Nadu electricity Board
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- Australian Coal Association
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- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- Mercator Lines Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- SMC Global Power, Philippines
- Kapuas Tunggal Persada - Indonesia
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Baramulti Group, Indonesia
- OPG Power Generation Pvt Ltd - India
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sinarmas Energy and Mining - Indonesia
- Indian Energy Exchange, India
- Maheswari Brothers Coal Limited - India
- Goldman Sachs - Singapore
- Bayan Resources Tbk. - Indonesia
- Price Waterhouse Coopers - Russia
- Cigading International Bulk Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Meralco Power Generation, Philippines
- Sree Jayajothi Cements Limited - India
- Grasim Industreis Ltd - India
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Straits Asia Resources Limited - Singapore
- New Zealand Coal & Carbon
- Uttam Galva Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- White Energy Company Limited
- Sojitz Corporation - Japan
- Kalimantan Lumbung Energi - Indonesia
- Indian Oil Corporation Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Intertek Mineral Services - Indonesia
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Semirara Mining Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- Karbindo Abesyapradhi - Indoneisa
- Economic Council, Georgia
- Bhatia International Limited - India
- CNBM International Corporation - China
- PTC India Limited - India
- Merrill Lynch Commodities Europe
- VISA Power Limited - India
- Ind-Barath Power Infra Limited - India
- Parliament of New Zealand
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Bulk Trading Sa - Switzerland
- Samtan Co., Ltd - South Korea
- Global Coal Blending Company Limited - Australia
- Star Paper Mills Limited - India
- Global Business Power Corporation, Philippines
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- GMR Energy Limited - India
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- Planning Commission, India
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