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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, 17 July 23
APPROVED AMMONIA-FUELED CONTAINERSHIP - BENEFITS AND RISKS: REED SMITH
Following the news in Offshore Energy that Korea Maritime Consultants has secured approval in principle from the American Bureau of Shipping for it ...
Friday, 14 July 23
CLEAN COAL USE KEY TO DEEP CUTS IN EMISSIONS, STABLE ELECTRICITY SUPPLY - CHINA DAILY
China must push for the clean use of coal and step up integration of the dirty fuel with carbon capture, utilization and storage to achieve sustain ...
Thursday, 13 July 23
VIETNAM'S COAL EMISSIONS PRIMED FOR SURGE AFTER IMPORTS JUMP - REUTERS
Vietnam’s thermal power emissions are primed for a steep climb this summer after the country’s imports of thermal coal soared to their ...
Monday, 26 June 23
COAL PRODUCTION AND CONSUMPTION UP IN 2022 - EUROSTAT
In 2022, EU coal production and consumption continued to increase, reaching 349 million tonnes (+5% compared with the previous year) and 454 millio ...
Wednesday, 21 June 23
QATAR STRIKES SECOND BIG LNG SUPPLY DEAL WITH CHINA - REUTERS
Qatar on Tuesday secured its second large gas supply deal with a Chinese state-controlled company in less than a year, putting Asia clearly ahead i ...
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- South Luzon Thermal Energy Corporation
- Bahari Cakrawala Sebuku - Indonesia
- Sojitz Corporation - Japan
- Gujarat Sidhee Cement - India
- AsiaOL BioFuels Corp., Philippines
- Karaikal Port Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- CNBM International Corporation - China
- Leighton Contractors Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Georgia Ports Authority, United States
- Aboitiz Power Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Tamil Nadu electricity Board
- Star Paper Mills Limited - India
- TeaM Sual Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Bhushan Steel Limited - India
- Ministry of Mines - Canada
- Kaltim Prima Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- CIMB Investment Bank - Malaysia
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- Aditya Birla Group - India
- Vizag Seaport Private Limited - India
- Ministry of Transport, Egypt
- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
- Trasteel International SA, Italy
- Anglo American - United Kingdom
- Manunggal Multi Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
- Eastern Energy - Thailand
- Holcim Trading Pte Ltd - Singapore
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- IHS Mccloskey Coal Group - USA
- Sree Jayajothi Cements Limited - India
- Borneo Indobara - Indonesia
- London Commodity Brokers - England
- Sakthi Sugars Limited - India
- Indian Oil Corporation Limited
- Wilmar Investment Holdings
- SN Aboitiz Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- Carbofer General Trading SA - India
- Mjunction Services Limited - India
- Standard Chartered Bank - UAE
- Global Green Power PLC Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- Sindya Power Generating Company Private Ltd
- International Coal Ventures Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- SMC Global Power, Philippines
- Australian Coal Association
- Iligan Light & Power Inc, Philippines
- Planning Commission, India
- Bharathi Cement Corporation - India
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Petron Corporation, Philippines
- Heidelberg Cement - Germany
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- Bukit Makmur.PT - Indonesia
- Siam City Cement - Thailand
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- European Bulk Services B.V. - Netherlands
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Vedanta Resources Plc - India
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Baramulti Group, Indonesia
- Ind-Barath Power Infra Limited - India
- The University of Queensland
- White Energy Company Limited
- Minerals Council of Australia
- Port Waratah Coal Services - Australia
- Coalindo Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Coastal Gujarat Power Limited - India
- Energy Development Corp, Philippines
- Attock Cement Pakistan Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- Kideco Jaya Agung - Indonesia
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- India Bulls Power Limited - India
- Meenaskhi Energy Private Limited - India
- Independent Power Producers Association of India
- Mercator Lines Limited - India
- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Romanian Commodities Exchange
- MS Steel International - UAE
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- VISA Power Limited - India
- Malabar Cements Ltd - India
- Parliament of New Zealand
- Billiton Holdings Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Globalindo Alam Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- Meralco Power Generation, Philippines
- Alfred C Toepfer International GmbH - Germany
- SMG Consultants - Indonesia
- Eastern Coal Council - USA
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- Jorong Barutama Greston.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- Banpu Public Company Limited - Thailand
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GVK Power & Infra Limited - India
- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
- Mintek Dendrill Indonesia
- Altura Mining Limited, Indonesia
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Thiess Contractors Indonesia
- Electricity Generating Authority of Thailand
- Interocean Group of Companies - India
- Global Business Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Gujarat Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tata Chemicals Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- PetroVietnam Power Coal Import and Supply Company
- Electricity Authority, New Zealand
- Timah Investasi Mineral - Indoneisa
- Economic Council, Georgia
- Jaiprakash Power Ventures ltd
- Central Electricity Authority - India
- Indika Energy - Indonesia
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Power Finance Corporation Ltd., India
- Oldendorff Carriers - Singapore
- Bhoruka Overseas - Indonesia
- Renaissance Capital - South Africa
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Sical Logistics Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coal and Oil Company - UAE
- Xindia Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- Marubeni Corporation - India
- New Zealand Coal & Carbon
- LBH Netherlands Bv - Netherlands
- The State Trading Corporation of India Ltd
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