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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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Tuesday, 11 April 23
OIL RISES ON CHINA STIMULUS EXPECTATIONS, WEAKER DOLLAR - REUTERS
Oil prices rose on Tuesday on expectations of potential economic stimulus by China, healthy demand in the rest of Asia and a drop in U.S. crude sto ...
Sunday, 09 April 23
CHINA’S BUSINESS INCOME REBOUND POINTS TO IMPROVING ECONOMY: OFFICIAL - XINHUA
Chinese businesses have posted a strong rebound in sales revenue since the beginning of this year in the latest signal of an improving economy.
...
Sunday, 09 April 23
COAL INDIA TO BOOST SUPPLIES TO INDUSTRIES AS UTILITIES’ INVENTORIES RISE - REUTERS
Coal India Ltd will increase supplies to industries, the world’s largest coal miner said on Wednesday as fuel inventories at utilities run by ...
Thursday, 06 April 23
MARKET INSIGHT - INTERMODAL
LNG Current Supply/Demand Dynamics
This year, LNG supply will likely exceed demand, so prices will need to decline to levels that will encourag ...
Sunday, 26 March 23
EUROPE’S RUSH TO LNG COULD TURN INTO 'WORLD’S MOST EXPENSIVE AND UNNECESSARY INSURANCE POLICY'- CNBC
Europe’s rapid buildout of liquefied natural gas infrastructure is on track to far exceed demand by the end of the decade, according to new r ...
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Showing 111 to 115 news of total 6871 |
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- Karbindo Abesyapradhi - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- ASAPP Information Group - India
- Siam City Cement PLC, Thailand
- Indogreen Group - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- Orica Mining Services - Indonesia
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- Bayan Resources Tbk. - Indonesia
- Altura Mining Limited, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Energy Development Corp, Philippines
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- Uttam Galva Steels Limited - India
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- Chamber of Mines of South Africa
- Jorong Barutama Greston.PT - Indonesia
- Australian Coal Association
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- Essar Steel Hazira Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Dalmia Cement Bharat India
- Indonesian Coal Mining Association
- Metalloyd Limited - United Kingdom
- GVK Power & Infra Limited - India
- Edison Trading Spa - Italy
- Indika Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Electricity Generating Authority of Thailand
- Ambuja Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Savvy Resources Ltd - HongKong
- Xindia Steels Limited - India
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- Tata Chemicals Ltd - India
- Bukit Makmur.PT - Indonesia
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- Grasim Industreis Ltd - India
- New Zealand Coal & Carbon
- Kalimantan Lumbung Energi - Indonesia
- Standard Chartered Bank - UAE
- Krishnapatnam Port Company Ltd. - India
- Central Java Power - Indonesia
- Romanian Commodities Exchange
- Kaltim Prima Coal - Indonesia
- IEA Clean Coal Centre - UK
- Eastern Energy - Thailand
- Cement Manufacturers Association - India
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- Renaissance Capital - South Africa
- The University of Queensland
- CIMB Investment Bank - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coal and Oil Company - UAE
- London Commodity Brokers - England
- Ministry of Mines - Canada
- Indian Energy Exchange, India
- Ministry of Finance - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- Thiess Contractors Indonesia
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Power Finance Corporation Ltd., India
- Mjunction Services Limited - India
- Karaikal Port Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Attock Cement Pakistan Limited
- Heidelberg Cement - Germany
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- Bhushan Steel Limited - India
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Wood Mackenzie - Singapore
- Simpson Spence & Young - Indonesia
- The Treasury - Australian Government
- Eastern Coal Council - USA
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- Sarangani Energy Corporation, Philippines
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- Anglo American - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Antam Resourcindo - Indonesia
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
- Bhatia International Limited - India
- Toyota Tsusho Corporation, Japan
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Electricity Authority, New Zealand
- Jaiprakash Power Ventures ltd
- Timah Investasi Mineral - Indoneisa
- Formosa Plastics Group - Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Meralco Power Generation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Minerals Council of Australia
- Kideco Jaya Agung - Indonesia
- Interocean Group of Companies - India
- Bukit Baiduri Energy - Indonesia
- Malabar Cements Ltd - India
- SMG Consultants - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- Salva Resources Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Parliament of New Zealand
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement - Thailand
- Barasentosa Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Parry Sugars Refinery, India
- Gujarat Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Commonwealth Bank - Australia
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Independent Power Producers Association of India
- Directorate Of Revenue Intelligence - India
- The State Trading Corporation of India Ltd
- Intertek Mineral Services - Indonesia
- Semirara Mining Corp, Philippines
- Medco Energi Mining Internasional
- Australian Commodity Traders Exchange
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Deloitte Consulting - India
- Singapore Mercantile Exchange
- Videocon Industries ltd - India
- Goldman Sachs - Singapore
- TeaM Sual Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Bharathi Cement Corporation - India
- Kepco SPC Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- ICICI Bank Limited - India
- PowerSource Philippines DevCo
- Central Electricity Authority - India
- Sojitz Corporation - Japan
- Thai Mozambique Logistica
- Petrochimia International Co. Ltd.- Taiwan
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- Merrill Lynch Commodities Europe
- PetroVietnam Power Coal Import and Supply Company
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Price Waterhouse Coopers - Russia
- Mercator Lines Limited - India
- MS Steel International - UAE
- Sakthi Sugars Limited - India
- Vizag Seaport Private Limited - India
- GMR Energy Limited - India
- Straits Asia Resources Limited - Singapore
- Makarim & Taira - Indonesia
- Wilmar Investment Holdings
- Indo Tambangraya Megah - Indonesia
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Rio Tinto Coal - Australia
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- Miang Besar Coal Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Energy Link Ltd, New Zealand
- Indian Oil Corporation Limited
- Coastal Gujarat Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Mineral Development Corp Ltd - India
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