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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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Monday, 08 January 24
KOSPO TO BUY 80000 MT OF INDONESIAN LOW CALORIFIC VALUE COAL FOR FEB 2024
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for the supply of Indonesian Low Calorific Value Coal from qualified suppliers for Korean ...
Monday, 08 January 24
SEABORNE TRADE REACHES 12.4BN TONNES - CLARKSONS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
Monday, 08 January 24
CAPESIZES START THE NEW YEAR ON POSITIVE NOTE - BALTIC EXCHANGE
Capesize
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Friday, 05 January 24
MORGAN STANLEY SEES LOWER OIL PRICES IN 2024 ON OVERSUPPLY CONCERNS - REUTERS
Morgan Stanley sees Brent crude prices anchored near $80 per barrel in the first half in 2024 before declining towards the end of the year as it ex ...
Friday, 05 January 24
INDIA'S COAL OUTPUT RISES NEARLY 11 PC IN DEC TO 92.87 MT - PTI
India’s coal production increased by 10.75 per cent to 92.87 million tonne in December 2023 as compared to the year-ago period, an official s ...
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- The State Trading Corporation of India Ltd
- Sical Logistics Limited - India
- Independent Power Producers Association of India
- Videocon Industries ltd - India
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- Thiess Contractors Indonesia
- GAC Shipping (India) Pvt Ltd
- Wilmar Investment Holdings
- Parliament of New Zealand
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- Siam City Cement PLC, Thailand
- Bulk Trading Sa - Switzerland
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- SN Aboitiz Power Inc, Philippines
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- Indika Energy - Indonesia
- Carbofer General Trading SA - India
- CNBM International Corporation - China
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
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- PetroVietnam Power Coal Import and Supply Company
- Bayan Resources Tbk. - Indonesia
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- Global Business Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- Power Finance Corporation Ltd., India
- Central Electricity Authority - India
- Trasteel International SA, Italy
- Altura Mining Limited, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Orica Mining Services - Indonesia
- Iligan Light & Power Inc, Philippines
- PTC India Limited - India
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- SMC Global Power, Philippines
- Sindya Power Generating Company Private Ltd
- GMR Energy Limited - India
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- Bhushan Steel Limited - India
- PowerSource Philippines DevCo
- Sakthi Sugars Limited - India
- Bhatia International Limited - India
- Vizag Seaport Private Limited - India
- Siam City Cement - Thailand
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- Maheswari Brothers Coal Limited - India
- India Bulls Power Limited - India
- The University of Queensland
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- TeaM Sual Corporation - Philippines
- Romanian Commodities Exchange
- Economic Council, Georgia
- Central Java Power - Indonesia
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Ambuja Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Petron Corporation, Philippines
- Antam Resourcindo - Indonesia
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Thai Mozambique Logistica
- Georgia Ports Authority, United States
- Petrochimia International Co. Ltd.- Taiwan
- Indian Energy Exchange, India
- McConnell Dowell - Australia
- Straits Asia Resources Limited - Singapore
- Mintek Dendrill Indonesia
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- Bukit Baiduri Energy - Indonesia
- Planning Commission, India
- Manunggal Multi Energi - Indonesia
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- Edison Trading Spa - Italy
- Heidelberg Cement - Germany
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- International Coal Ventures Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Commonwealth Bank - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wood Mackenzie - Singapore
- Salva Resources Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- Borneo Indobara - Indonesia
- Meralco Power Generation, Philippines
- Bharathi Cement Corporation - India
- Jaiprakash Power Ventures ltd
- Bahari Cakrawala Sebuku - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Link Ltd, New Zealand
- Kaltim Prima Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Posco Energy - South Korea
- Electricity Generating Authority of Thailand
- Dalmia Cement Bharat India
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- The Treasury - Australian Government
- London Commodity Brokers - England
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- Australian Coal Association
- Riau Bara Harum - Indonesia
- Price Waterhouse Coopers - Russia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IHS Mccloskey Coal Group - USA
- Semirara Mining and Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- VISA Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Uttam Galva Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Kapuas Tunggal Persada - Indonesia
- PNOC Exploration Corporation - Philippines
- Attock Cement Pakistan Limited
- Star Paper Mills Limited - India
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Madhucon Powers Ltd - India
- Eastern Energy - Thailand
- Savvy Resources Ltd - HongKong
- Indonesian Coal Mining Association
- OPG Power Generation Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- White Energy Company Limited
- Baramulti Group, Indonesia
- Latin American Coal - Colombia
- GN Power Mariveles Coal Plant, Philippines
- Kohat Cement Company Ltd. - Pakistan
- New Zealand Coal & Carbon
- Ministry of Finance - Indonesia
- Orica Australia Pty. Ltd.
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
- Bhoruka Overseas - Indonesia
- Ministry of Transport, Egypt
- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Semirara Mining Corp, Philippines
- Lanco Infratech Ltd - India
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- Gujarat Sidhee Cement - India
- Directorate General of MIneral and Coal - Indonesia
- MS Steel International - UAE
- Cement Manufacturers Association - India
- Sinarmas Energy and Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- Australian Commodity Traders Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Mjunction Services Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
- IEA Clean Coal Centre - UK
- Therma Luzon, Inc, Philippines
- Jindal Steel & Power Ltd - India
- Medco Energi Mining Internasional
- Toyota Tsusho Corporation, Japan
- Barasentosa Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
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