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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, 13 February 24
WHAT IS THE OUTLOOK FOR THE NATURAL GAS SPOT PRICE IN 2024 AND 2025? EIA
We expect the U.S. benchmark Henry Hub natural gas spot price to average higher in 2024 and 2025 than in 2023, but to remain lower than $3.00 per m ...
Monday, 12 February 24
US THERMAL COAL EXPORTS HIT 5-YEAR HIGHS AND TOP $5 BLN IN 2023 - REUTERS
United States exporters of thermal coal earned more than $5 billion in 2023 as they shipped out more than 32.5 million metric tons of the high-poll ...
Tuesday, 06 February 24
NEW E-FUELS PROJECT TO MAKE INTERNATIONAL SHIPPING CLIMATE-NEUTRAL - RINA
Transport and trade on the ocean blue must be made much greener. This is the goal of the new €17 million European GAMMA project, where compani ...
Tuesday, 06 February 24
INDIA SEES ANNUAL COAL OUTPUT UP 10.9% IN 2024/25 - REUTERS
India expects domestic coal output to increase by 10.9% to 1.13 billion metric tons in the fiscal year ending March 2025, a senior government offic ...
Tuesday, 06 February 24
INDIA'S COAL PRODUCTION INCREASES BY 10.3% TO 99.73 MILLION TONNE IN JANUARY - PTI
The country’s coal output rose 10.3 per cent to 99.73 Million Tonne (MT) in January, over the same month in the previous fiscal.
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- Riau Bara Harum - Indonesia
- Ministry of Finance - Indonesia
- ICICI Bank Limited - India
- Alfred C Toepfer International GmbH - Germany
- PowerSource Philippines DevCo
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- Malabar Cements Ltd - India
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- Oldendorff Carriers - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- Economic Council, Georgia
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- Sakthi Sugars Limited - India
- Petron Corporation, Philippines
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- Eastern Coal Council - USA
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- Billiton Holdings Pty Ltd - Australia
- Edison Trading Spa - Italy
- Attock Cement Pakistan Limited
- South Luzon Thermal Energy Corporation
- Coalindo Energy - Indonesia
- Global Business Power Corporation, Philippines
- Indian Energy Exchange, India
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Energy Development Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Gujarat Sidhee Cement - India
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Bhoruka Overseas - Indonesia
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- Electricity Authority, New Zealand
- VISA Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Sical Logistics Limited - India
- Singapore Mercantile Exchange
- Global Coal Blending Company Limited - Australia
- TeaM Sual Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Kobexindo Tractors - Indoneisa
- Toyota Tsusho Corporation, Japan
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- GVK Power & Infra Limited - India
- Australian Commodity Traders Exchange
- Jaiprakash Power Ventures ltd
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Interocean Group of Companies - India
- AsiaOL BioFuels Corp., Philippines
- Sarangani Energy Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- The Treasury - Australian Government
- Salva Resources Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Indika Energy - Indonesia
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- Central Java Power - Indonesia
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- Rashtriya Ispat Nigam Limited - India
- Therma Luzon, Inc, Philippines
- Posco Energy - South Korea
- Mercuria Energy - Indonesia
- SMC Global Power, Philippines
- The University of Queensland
- Kaltim Prima Coal - Indonesia
- Simpson Spence & Young - Indonesia
- SMG Consultants - Indonesia
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Mining Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Maharashtra Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Independent Power Producers Association of India
- Bhushan Steel Limited - India
- Australian Coal Association
- PetroVietnam Power Coal Import and Supply Company
- Asmin Koalindo Tuhup - Indonesia
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Energy Link Ltd, New Zealand
- Wilmar Investment Holdings
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- Eastern Energy - Thailand
- Parliament of New Zealand
- McConnell Dowell - Australia
- Deloitte Consulting - India
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- Miang Besar Coal Terminal - Indonesia
- ASAPP Information Group - India
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Africa Commodities Group - South Africa
- Semirara Mining Corp, Philippines
- CNBM International Corporation - China
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- PTC India Limited - India
- Ministry of Transport, Egypt
- Chamber of Mines of South Africa
- Siam City Cement - Thailand
- Thiess Contractors Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Makarim & Taira - Indonesia
- Tamil Nadu electricity Board
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Formosa Plastics Group - Taiwan
- Parry Sugars Refinery, India
- Sinarmas Energy and Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Australia Pty. Ltd.
- Heidelberg Cement - Germany
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- San Jose City I Power Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- MS Steel International - UAE
- Power Finance Corporation Ltd., India
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Ceylon Electricity Board - Sri Lanka
- Merrill Lynch Commodities Europe
- Electricity Generating Authority of Thailand
- Straits Asia Resources Limited - Singapore
- White Energy Company Limited
- Sindya Power Generating Company Private Ltd
- Aditya Birla Group - India
- Karaikal Port Pvt Ltd - India
- GMR Energy Limited - India
- Port Waratah Coal Services - Australia
- Siam City Cement PLC, Thailand
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- IEA Clean Coal Centre - UK
- LBH Netherlands Bv - Netherlands
- Vizag Seaport Private Limited - India
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- Star Paper Mills Limited - India
- Coastal Gujarat Power Limited - India
- Bangladesh Power Developement Board
- Planning Commission, India
- Minerals Council of Australia
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Manunggal Multi Energi - Indonesia
- Ministry of Mines - Canada
- Neyveli Lignite Corporation Ltd, - India
- The State Trading Corporation of India Ltd
- Mintek Dendrill Indonesia
- Grasim Industreis Ltd - India
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Makmur.PT - Indonesia
- Lanco Infratech Ltd - India
- Dalmia Cement Bharat India
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- Marubeni Corporation - India
- Thai Mozambique Logistica
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- Commonwealth Bank - Australia
- Gujarat Mineral Development Corp Ltd - India
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
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