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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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Friday, 22 March 24
INDONESIA APPROVES 922.14 MLN T COAL PRODUCTION QUOTA FOR 2024, ABOVE TARGET - REUTERS
Indonesia has approved coal production quotas totalling 922.14 million metric tons for 2024, Bambang Suswantono, a senior official at the mining mi ...
Friday, 22 March 24
CHINA COAL INDUSTRY GROUP EXPECTS OUTPUT GROWTH TO SLOW IN 2024 - REUTERS
China’s coal output is expected to increase 36 million metric tons, or 0.8%, to about 4.7 billion tonnes in 2024, a Chinese coal industry gro ...
Monday, 18 March 24
THREE KEY TAKEAWAYS FROM OUR EUROPE GAS MARKETS SHORT-TERM OUTLOOK Q1 2024 - WOOD MACKENZIE
European gas prices are currently back to pre-crisis levels, but with a complex series of factors affecting future supply and demand, are they set ...
Wednesday, 06 March 24
INDONESIA AIMS TO FINISH MINING OUTPUT QUOTAS APPROVAL BY END-MARCH, OFFICIAL SAYS - REUTERS
Indonesia’s has approved the mining production quotarequests from more than 120mineral companies and aims to complete the approval process th ...
Monday, 04 March 24
IS YOUR GUARANTEE A GUARANTEE? NOTE TO SHIPOWNERS - GARD
KNOWLEDGE TO ELEVATE
The law of guarantees is not always obvious or easy to understand without proper guidance. This article clarifies the dif ...
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Showing 26 to 30 news of total 6871 |
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- Borneo Indobara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Jindal Steel & Power Ltd - India
- Coalindo Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Star Paper Mills Limited - India
- SN Aboitiz Power Inc, Philippines
- Renaissance Capital - South Africa
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Central Electricity Authority - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- San Jose City I Power Corp, Philippines
- Kumho Petrochemical, South Korea
- PTC India Limited - India
- ICICI Bank Limited - India
- Sical Logistics Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Alfred C Toepfer International GmbH - Germany
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Rashtriya Ispat Nigam Limited - India
- ASAPP Information Group - India
- Orica Australia Pty. Ltd.
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Bhatia International Limited - India
- Meenaskhi Energy Private Limited - India
- Orica Mining Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- Maharashtra Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- Kartika Selabumi Mining - Indonesia
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- McConnell Dowell - Australia
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- Dalmia Cement Bharat India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Xindia Steels Limited - India
- New Zealand Coal & Carbon
- Planning Commission, India
- Wood Mackenzie - Singapore
- Australian Commodity Traders Exchange
- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- IEA Clean Coal Centre - UK
- Wilmar Investment Holdings
- CNBM International Corporation - China
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Energy Link Ltd, New Zealand
- Madhucon Powers Ltd - India
- Marubeni Corporation - India
- Anglo American - United Kingdom
- Eastern Coal Council - USA
- Pendopo Energi Batubara - Indonesia
- South Luzon Thermal Energy Corporation
- Chettinad Cement Corporation Ltd - India
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The Treasury - Australian Government
- Malabar Cements Ltd - India
- VISA Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Salva Resources Pvt Ltd - India
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- Gujarat Sidhee Cement - India
- Straits Asia Resources Limited - Singapore
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Thai Mozambique Logistica
- International Coal Ventures Pvt Ltd - India
- London Commodity Brokers - England
- Coal and Oil Company - UAE
- Baramulti Group, Indonesia
- Ambuja Cements Ltd - India
- Commonwealth Bank - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Ind-Barath Power Infra Limited - India
- SMG Consultants - Indonesia
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Economic Council, Georgia
- Jorong Barutama Greston.PT - Indonesia
- Romanian Commodities Exchange
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
- Trasteel International SA, Italy
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Meralco Power Generation, Philippines
- Deloitte Consulting - India
- Krishnapatnam Port Company Ltd. - India
- Gujarat Mineral Development Corp Ltd - India
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- Miang Besar Coal Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- Manunggal Multi Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- Sree Jayajothi Cements Limited - India
- Posco Energy - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Larsen & Toubro Limited - India
- AsiaOL BioFuels Corp., Philippines
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- MS Steel International - UAE
- Standard Chartered Bank - UAE
- Central Java Power - Indonesia
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- Ministry of Transport, Egypt
- Singapore Mercantile Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Africa Commodities Group - South Africa
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- Semirara Mining and Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- PowerSource Philippines DevCo
- Thiess Contractors Indonesia
- Simpson Spence & Young - Indonesia
- Barasentosa Lestari - Indonesia
- Mercuria Energy - Indonesia
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining Corp, Philippines
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Aboitiz Power Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Cement Manufacturers Association - India
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Videocon Industries ltd - India
- CIMB Investment Bank - Malaysia
- Mjunction Services Limited - India
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Therma Luzon, Inc, Philippines
- Bangladesh Power Developement Board
- Ceylon Electricity Board - Sri Lanka
- Directorate Of Revenue Intelligence - India
- GVK Power & Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Kideco Jaya Agung - Indonesia
- Sindya Power Generating Company Private Ltd
- Sakthi Sugars Limited - India
- Samtan Co., Ltd - South Korea
- Karaikal Port Pvt Ltd - India
- The University of Queensland
- Medco Energi Mining Internasional
- Sojitz Corporation - Japan
- Global Coal Blending Company Limited - Australia
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