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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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Thursday, 10 September 20
U.S. COAL PRODUCTION IN 2020 TO BE 511 MMST, 28 PER CENT LOWER THAN IN 2019 - EIA
EIA expects total U.S. coal production in 2020 to be 511 million short tons (MMst), 194 MMst (28%) lower than in 2019. Mitigation efforts related t ...
Thursday, 10 September 20
DRY BULK SHIPPING: CHINA'S DEMAND KEEPING THE DRY BULK MARKET GOING - PETER SAND | BIMCO
Overview
An impressive recovery in Chinese dry bulk imports has protected the industry from the effects of falling demand in the rest of the wo ...
Thursday, 10 September 20
TANKER SHIPPING: FREIGHT RATES BACK AT LOSS-MAKING LEVELS AFTER 12 VERY PROFITABLE MONTHS - BIMCO
Overview
A stunningly strong 12 months for the tanker shipping industry is now being replaced by lower freight rates, as lower oil product ...
Thursday, 10 September 20
INDIA'S COAL IMPORTS STUMBLE IN AUGUST, RAISING RISK OF SLOW RECOVERY - REFINITIV | BANCHERO COSTA
After posting a mild recovery in July, India's coal imports have stumbled in August as the South Asian nation battles to restart it ...
Thursday, 10 September 20
THE FIRST 8 MONTHS OF 2020, INDONESIA EXPORTED 217.4 MLN TONNES OF COAL BASED ON REFINITIV - BANCHERO COSTA
The coal market has been hit by a weaker global economy as a result of COVID-19 pandemic and falling industrial electricity demand ...
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- India Bulls Power Limited - India
- LBH Netherlands Bv - Netherlands
- Siam City Cement PLC, Thailand
- Central Electricity Authority - India
- OPG Power Generation Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- GMR Energy Limited - India
- Sree Jayajothi Cements Limited - India
- McConnell Dowell - Australia
- Electricity Generating Authority of Thailand
- Sakthi Sugars Limited - India
- Minerals Council of Australia
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- Indogreen Group - Indonesia
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- Antam Resourcindo - Indonesia
- Star Paper Mills Limited - India
- Riau Bara Harum - Indonesia
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- Coalindo Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Latin American Coal - Colombia
- AsiaOL BioFuels Corp., Philippines
- Larsen & Toubro Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- South Luzon Thermal Energy Corporation
- Renaissance Capital - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Bharathi Cement Corporation - India
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Parliament of New Zealand
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- Global Green Power PLC Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- Essar Steel Hazira Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Interocean Group of Companies - India
- IHS Mccloskey Coal Group - USA
- Orica Mining Services - Indonesia
- Altura Mining Limited, Indonesia
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- Coal and Oil Company - UAE
- SMG Consultants - Indonesia
- Pendopo Energi Batubara - Indonesia
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Agrawal Coal Company - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- IEA Clean Coal Centre - UK
- Wood Mackenzie - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- Chamber of Mines of South Africa
- Gujarat Mineral Development Corp Ltd - India
- Meralco Power Generation, Philippines
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- Australian Coal Association
- VISA Power Limited - India
- Heidelberg Cement - Germany
- Mercator Lines Limited - India
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Petron Corporation, Philippines
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Eastern Coal Council - USA
- The Treasury - Australian Government
- Global Coal Blending Company Limited - Australia
- Goldman Sachs - Singapore
- Samtan Co., Ltd - South Korea
- Bangladesh Power Developement Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- MS Steel International - UAE
- Videocon Industries ltd - India
- Straits Asia Resources Limited - Singapore
- Baramulti Group, Indonesia
- Vizag Seaport Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Karbindo Abesyapradhi - Indoneisa
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- Billiton Holdings Pty Ltd - Australia
- Aditya Birla Group - India
- Ind-Barath Power Infra Limited - India
- The University of Queensland
- Binh Thuan Hamico - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Mjunction Services Limited - India
- Timah Investasi Mineral - Indoneisa
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- Cement Manufacturers Association - India
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Dalmia Cement Bharat India
- Bhatia International Limited - India
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- Australian Commodity Traders Exchange
- Bhoruka Overseas - Indonesia
- Leighton Contractors Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Economic Council, Georgia
- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- Commonwealth Bank - Australia
- Thiess Contractors Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Mintek Dendrill Indonesia
- Wilmar Investment Holdings
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Gujarat Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Carbofer General Trading SA - India
- Gujarat Sidhee Cement - India
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Savvy Resources Ltd - HongKong
- Marubeni Corporation - India
- Alfred C Toepfer International GmbH - Germany
- CNBM International Corporation - China
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- San Jose City I Power Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- Toyota Tsusho Corporation, Japan
- Indian Energy Exchange, India
- Ministry of Mines - Canada
- PTC India Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Jindal Steel & Power Ltd - India
- Banpu Public Company Limited - Thailand
- Therma Luzon, Inc, Philippines
- Sojitz Corporation - Japan
- Formosa Plastics Group - Taiwan
- Kumho Petrochemical, South Korea
- Sical Logistics Limited - India
- Price Waterhouse Coopers - Russia
- Semirara Mining Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Salva Resources Pvt Ltd - India
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Standard Chartered Bank - UAE
- Rio Tinto Coal - Australia
- Ambuja Cements Ltd - India
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