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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, 22 November 23
INDIA: GOVERNMENT PLANS 1.4 BILLION TONNE COAL OUTPUT BY 2027 - LIVEMINT
The Union coal ministry on Monday announced plans to increase India’s coal production to 1.404 billion tonne by 2027, with an eye to further ...
Wednesday, 22 November 23
OBLIGATION. INDONESIA AIMS TO START COLLECTING LEVIES FROM COAL MINERS IN JANUARY - REUTERS
Indonesia plans to start collecting levies from coal miners in January to be used to compensate miners who sell coal to the state utility at lower ...
Tuesday, 21 November 23
INDIAN COAL POWER PLANTS’ CAPACITY UTILISATION WILL IMPROVE TO 65% THIS FISCAL: - CRISIL
Coal-based thermal power units’ plant load factor (PLF) or capacity utilisation will improve to 65 percent in the current fiscal year despite ...
Tuesday, 14 November 23
CAPITAL PRODUCT PARTNERS L.P. ANNOUNCES TRANSFORMATIVE TRANSACTION INCLUDING THE ACQUISITION OF 11 NEWBUILD LNG CARRIERS FOR $3.1 BILLION
Capital Product Partners L.P. announced that it has entered into an umbrella agreement (the “Umbrella Agreement”) with Capital Maritime ...
Tuesday, 14 November 23
COAL INDIA BEATS Q2 PROFIT VIEW ON HIGH POWER DEMAND AMID WEAK MONSOON - REUTERS
Coal India on Friday reported better-than-expected second-quarter profit, helped by high power demand and boosted production amid a weak monsoon.
...
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- MS Steel International - UAE
- Carbofer General Trading SA - India
- Indika Energy - Indonesia
- Ministry of Mines - Canada
- Kumho Petrochemical, South Korea
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- Coal and Oil Company - UAE
- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
- Eastern Energy - Thailand
- Indian Energy Exchange, India
- Parliament of New Zealand
- Siam City Cement - Thailand
- Kohat Cement Company Ltd. - Pakistan
- International Coal Ventures Pvt Ltd - India
- Petron Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Samtan Co., Ltd - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Tamil Nadu electricity Board
- CIMB Investment Bank - Malaysia
- Power Finance Corporation Ltd., India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Makarim & Taira - Indonesia
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- Ministry of Transport, Egypt
- Standard Chartered Bank - UAE
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- Parry Sugars Refinery, India
- The State Trading Corporation of India Ltd
- IHS Mccloskey Coal Group - USA
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Deloitte Consulting - India
- Intertek Mineral Services - Indonesia
- Interocean Group of Companies - India
- Therma Luzon, Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Australian Commodity Traders Exchange
- Attock Cement Pakistan Limited
- New Zealand Coal & Carbon
- Anglo American - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Electricity Generating Authority of Thailand
- Jaiprakash Power Ventures ltd
- Larsen & Toubro Limited - India
- Eastern Coal Council - USA
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Goldman Sachs - Singapore
- Videocon Industries ltd - India
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- Grasim Industreis Ltd - India
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Heidelberg Cement - Germany
- Central Java Power - Indonesia
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- Meenaskhi Energy Private Limited - India
- Bulk Trading Sa - Switzerland
- Wood Mackenzie - Singapore
- Gujarat Sidhee Cement - India
- White Energy Company Limited
- Agrawal Coal Company - India
- ICICI Bank Limited - India
- Minerals Council of Australia
- Bhushan Steel Limited - India
- India Bulls Power Limited - India
- Posco Energy - South Korea
- Holcim Trading Pte Ltd - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- GVK Power & Infra Limited - India
- SMG Consultants - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Cement Manufacturers Association - India
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Economic Council, Georgia
- Coalindo Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- GAC Shipping (India) Pvt Ltd
- Edison Trading Spa - Italy
- Barasentosa Lestari - Indonesia
- Madhucon Powers Ltd - India
- Chamber of Mines of South Africa
- Bangladesh Power Developement Board
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bhatia International Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Global Coal Blending Company Limited - Australia
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Electricity Authority, New Zealand
- Commonwealth Bank - Australia
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- The University of Queensland
- London Commodity Brokers - England
- Timah Investasi Mineral - Indoneisa
- Kaltim Prima Coal - Indonesia
- Riau Bara Harum - Indonesia
- Kartika Selabumi Mining - Indonesia
- Romanian Commodities Exchange
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Sical Logistics Limited - India
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- Coastal Gujarat Power Limited - India
- PTC India Limited - India
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Sree Jayajothi Cements Limited - India
- Indogreen Group - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- Star Paper Mills Limited - India
- SMC Global Power, Philippines
- Oldendorff Carriers - Singapore
- Rio Tinto Coal - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Energy Development Corp, Philippines
- Renaissance Capital - South Africa
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- Tata Chemicals Ltd - India
- CNBM International Corporation - China
- Semirara Mining Corp, Philippines
- Vedanta Resources Plc - India
- Pipit Mutiara Jaya. PT, Indonesia
- McConnell Dowell - Australia
- Billiton Holdings Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Mercator Lines Limited - India
- Meralco Power Generation, Philippines
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercuria Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Baramulti Group, Indonesia
- Marubeni Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Planning Commission, India
- Australian Coal Association
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Karaikal Port Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Mjunction Services Limited - India
- Xindia Steels Limited - India
- Metalloyd Limited - United Kingdom
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Bukit Baiduri Energy - Indonesia
- Vizag Seaport Private Limited - India
- VISA Power Limited - India
- Energy Link Ltd, New Zealand
- TeaM Sual Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Thai Mozambique Logistica
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- Semirara Mining and Power Corporation, Philippines
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