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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, 11 February 11
DRY BULK MARKET HEATING UP ON FRESH CARGO DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market is on a high this week, with owners of smaller vessels turning their attention towards the spot market, in order to take advanta ...
Thursday, 10 February 11
SUPRA RATES IMPROVED A LITTLE OVER US$ 6K BSS N. CHINA DELIVERY FOR INDO-INDIA AND THAILAND ROUNDS - FEARNBULK
Handy
Atl is still weak with little fresh enquiry and an accumulation of spot tonnage.Owners are reluctant to send tonnage thru Suez due to uncert ...
Thursday, 10 February 11
BUKIT ASAM EXPECTS ABOVE RP 3 TRIO PROFIT
The state-owned coal miner PT Tambang Bukit Asam Tbk (PTBA) expects to reach 2011's net profit above Rp 3 trillion (US$ 336,322,568) from above Rp2 ...
Wednesday, 09 February 11
INDONESIA ALLOWED 60 COAL TRADING COMPANIES TO EXPORT COAL
COALspot.com - A temporary ban imposed on coal traders in January has lifted this week. As of today 60coal trading companies were allowed to resume ...
Tuesday, 08 February 11
INDIA'S SIMHAPURU TARGETS S.AFRICAN COAL - ECONOMIC TIMES
Economic Times reported that, India's Simhapuri Energy , a unit of the Madhucon Group , wants to buy new or existing collieries in South Africa fro ...
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- Kumho Petrochemical, South Korea
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Standard Chartered Bank - UAE
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Eastern Energy - Thailand
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- Central Java Power - Indonesia
- Agrawal Coal Company - India
- Indonesian Coal Mining Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Toyota Tsusho Corporation, Japan
- India Bulls Power Limited - India
- SMG Consultants - Indonesia
- Interocean Group of Companies - India
- MS Steel International - UAE
- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- CIMB Investment Bank - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Malabar Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Cement Manufacturers Association - India
- Deloitte Consulting - India
- ASAPP Information Group - India
- Sree Jayajothi Cements Limited - India
- Ministry of Mines - Canada
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement PLC, Thailand
- Mintek Dendrill Indonesia
- Minerals Council of Australia
- Mjunction Services Limited - India
- Bhatia International Limited - India
- Gujarat Sidhee Cement - India
- SMC Global Power, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- The State Trading Corporation of India Ltd
- Siam City Cement - Thailand
- Vedanta Resources Plc - India
- Ind-Barath Power Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Electricity Authority, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Tamil Nadu electricity Board
- Uttam Galva Steels Limited - India
- Samtan Co., Ltd - South Korea
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Borneo Indobara - Indonesia
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- Xindia Steels Limited - India
- Posco Energy - South Korea
- Aboitiz Power Corporation - Philippines
- Videocon Industries ltd - India
- Global Coal Blending Company Limited - Australia
- Energy Link Ltd, New Zealand
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- PTC India Limited - India
- Planning Commission, India
- Kobexindo Tractors - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- Singapore Mercantile Exchange
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Vijayanagar Sugar Pvt Ltd - India
- Bharathi Cement Corporation - India
- Iligan Light & Power Inc, Philippines
- Edison Trading Spa - Italy
- Sarangani Energy Corporation, Philippines
- Economic Council, Georgia
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- Energy Development Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Salva Resources Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- Marubeni Corporation - India
- Goldman Sachs - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- Petron Corporation, Philippines
- Tata Chemicals Ltd - India
- Simpson Spence & Young - Indonesia
- Parliament of New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bukit Makmur.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Medco Energi Mining Internasional
- Essar Steel Hazira Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Makarim & Taira - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- GVK Power & Infra Limited - India
- ICICI Bank Limited - India
- Karaikal Port Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Baramulti Group, Indonesia
- Timah Investasi Mineral - Indoneisa
- Wilmar Investment Holdings
- San Jose City I Power Corp, Philippines
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- Intertek Mineral Services - Indonesia
- Rio Tinto Coal - Australia
- Parry Sugars Refinery, India
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- Coal and Oil Company - UAE
- Trasteel International SA, Italy
- Thiess Contractors Indonesia
- Australian Commodity Traders Exchange
- Jindal Steel & Power Ltd - India
- Bhoruka Overseas - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- SN Aboitiz Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- Mercuria Energy - Indonesia
- Madhucon Powers Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- Antam Resourcindo - Indonesia
- Bukit Baiduri Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Meenaskhi Energy Private Limited - India
- Heidelberg Cement - Germany
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Africa Commodities Group - South Africa
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- IEA Clean Coal Centre - UK
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Bhushan Steel Limited - India
- Larsen & Toubro Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Altura Mining Limited, Indonesia
- Independent Power Producers Association of India
- Bayan Resources Tbk. - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
- Sical Logistics Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sojitz Corporation - Japan
- London Commodity Brokers - England
- Kalimantan Lumbung Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Electricity Generating Authority of Thailand
- OPG Power Generation Pvt Ltd - India
- Dalmia Cement Bharat India
- New Zealand Coal & Carbon
- Port Waratah Coal Services - Australia
- Indika Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- White Energy Company Limited
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Australian Coal Association
- Coastal Gujarat Power Limited - India
- Aditya Birla Group - India
- VISA Power Limited - India
- Bangladesh Power Developement Board
- International Coal Ventures Pvt Ltd - India
- Ministry of Finance - Indonesia
- Eastern Coal Council - USA
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Anglo American - United Kingdom
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Indian Energy Exchange, India
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