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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, 02 February 24
DRY BULK MARKET: THE DOWNWARD REVISION IN THE GROWTH OF CAPESIZE TONNE DAYS IN JANUARY WITH THE BCI DROPPING - MARIA BERTZELETOU
In the last week of January, the dry freight market sustained weakness in the Capesize segment, while the number of ballasters in the Southeast (SE ...
Friday, 02 February 24
COAL INDIA ACHIEVES NEARLY 80% OF ITS FY24 PRODUCTION TARGET IN TEN MONTHS - CNBCTV18
For the month of January, the company’s production grew by 9.1% from the same period last year to 78.4 Million Tonnes (MT), from 71.9 MT last ...
Thursday, 01 February 24
CHINA'S WIND, SOLAR CAPACITY TO OVERTAKE COAL IN 2024 - INDUSTRY BODY, REUTERS REPORTED
China’s installed wind and solar capacity is expected to overtake coal for the first time this year, according to industry forecasts.
&nb ...
Thursday, 01 February 24
ANTI-DEDUCTION CLAUSES: CAN A CHARTERER WITHHOLD HIRE WITHOUT AN OWNER'S CONSENT? - SKULD
KNOWLEDGE TO ELEVATE
Summary
In The Anna Dorothea, the Court found that where a charterparty provides that no deduction from hire may be m ...
Thursday, 01 February 24
INDIA REBUILDS COAL STOCKS TO ENSURE ELECTRIC RELIABILITY - REUTERS
India’s electricity supply is much more comfortable at the start of 2024 than in either 2023 or 2022 as coal production has ramped up and the ...
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- Miang Besar Coal Terminal - Indonesia
- Indogreen Group - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maharashtra Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Kaltim Prima Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- Orica Australia Pty. Ltd.
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Coalindo Energy - Indonesia
- Siam City Cement PLC, Thailand
- Ministry of Transport, Egypt
- Aditya Birla Group - India
- Planning Commission, India
- Borneo Indobara - Indonesia
- LBH Netherlands Bv - Netherlands
- Bayan Resources Tbk. - Indonesia
- Chettinad Cement Corporation Ltd - India
- Georgia Ports Authority, United States
- Malabar Cements Ltd - India
- Sical Logistics Limited - India
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Goldman Sachs - Singapore
- London Commodity Brokers - England
- Wilmar Investment Holdings
- Indika Energy - Indonesia
- Thai Mozambique Logistica
- Dalmia Cement Bharat India
- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- MS Steel International - UAE
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- SMC Global Power, Philippines
- Alfred C Toepfer International GmbH - Germany
- International Coal Ventures Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Renaissance Capital - South Africa
- Medco Energi Mining Internasional
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Savvy Resources Ltd - HongKong
- Videocon Industries ltd - India
- Latin American Coal - Colombia
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- VISA Power Limited - India
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- Rio Tinto Coal - Australia
- TeaM Sual Corporation - Philippines
- Gujarat Sidhee Cement - India
- Kapuas Tunggal Persada - Indonesia
- PowerSource Philippines DevCo
- Mercator Lines Limited - India
- Parry Sugars Refinery, India
- Anglo American - United Kingdom
- IHS Mccloskey Coal Group - USA
- Sojitz Corporation - Japan
- Pipit Mutiara Jaya. PT, Indonesia
- ASAPP Information Group - India
- GMR Energy Limited - India
- Globalindo Alam Lestari - Indonesia
- Commonwealth Bank - Australia
- Posco Energy - South Korea
- GAC Shipping (India) Pvt Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Salva Resources Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Heidelberg Cement - Germany
- Metalloyd Limited - United Kingdom
- Timah Investasi Mineral - Indoneisa
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Kumho Petrochemical, South Korea
- Krishnapatnam Port Company Ltd. - India
- Romanian Commodities Exchange
- Mjunction Services Limited - India
- Attock Cement Pakistan Limited
- PTC India Limited - India
- Ministry of Finance - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Standard Chartered Bank - UAE
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- IEA Clean Coal Centre - UK
- Larsen & Toubro Limited - India
- PNOC Exploration Corporation - Philippines
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- Maheswari Brothers Coal Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Thiess Contractors Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Mintek Dendrill Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- ICICI Bank Limited - India
- Cement Manufacturers Association - India
- GVK Power & Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Baramulti Group, Indonesia
- Electricity Generating Authority of Thailand
- Tata Chemicals Ltd - India
- Iligan Light & Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- Jaiprakash Power Ventures ltd
- Sree Jayajothi Cements Limited - India
- Pendopo Energi Batubara - Indonesia
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Bhatia International Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Therma Luzon, Inc, Philippines
- Deloitte Consulting - India
- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Australian Coal Association
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- Oldendorff Carriers - Singapore
- Billiton Holdings Pty Ltd - Australia
- Indian Oil Corporation Limited
- Global Business Power Corporation, Philippines
- White Energy Company Limited
- Bangladesh Power Developement Board
- Central Electricity Authority - India
- Jorong Barutama Greston.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Kepco SPC Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Bukit Baiduri Energy - Indonesia
- Coal and Oil Company - UAE
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Orica Mining Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Eastern Coal Council - USA
- Minerals Council of Australia
- Siam City Cement - Thailand
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- Grasim Industreis Ltd - India
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- Bharathi Cement Corporation - India
- Barasentosa Lestari - Indonesia
- Lanco Infratech Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Ambuja Cements Ltd - India
- Antam Resourcindo - Indonesia
- Africa Commodities Group - South Africa
- Indonesian Coal Mining Association
- SN Aboitiz Power Inc, Philippines
- Marubeni Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- Xindia Steels Limited - India
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