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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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Wednesday, 02 February 11
BAYAN TO SUPPLY COAL TO TP UTILITIES LTD
Insider Stories has reportd that, Indonesia's one of the leading coal miner PT Bayan Resources Tbk (BYAN) owned by businessman Dato' Low Tuck ...
Wednesday, 02 February 11
HUGE TONNAGE OVERSUPPLY LOOMING FOR DRY BULK MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the dry bulk market taking another dive yesterday, to just over 1,000 points (1,084), losing more than 2% on the day, it’s more than obvi ...
Monday, 31 January 11
S. SUMATRA COAL RAILWAY TO BE COMPLETED ON SCHEDULE - THE JAKARTA POST
The Jakarta Post reported that, despite land acquisition problems, state coal mining company PT Bukit Asam is upbeat that the development of a railw ...
Monday, 31 January 11
COAL MINER PTBA TO DRIVE OUTPUT WITH ACQUISITIONS - THE JAKARTA GLOBE
The Jakarta Globe reported that, State coal company Perusahaan Tambang Batubara Bukit Asam said its output would increase 34 percent to 17.6 million ...
Saturday, 29 January 11
PRESSURE ON SHIPPING MARKET MAY CONTINUE UNTIL MID FEBRUARY 2011
COALspot.com - The BDI continues to drop and saw a drop of about 5 pct this week closing at 1370 points.
In May 2010 the BDI touched 4,209 ...
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- Makarim & Taira - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- Georgia Ports Authority, United States
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Pendopo Energi Batubara - Indonesia
- Medco Energi Mining Internasional
- India Bulls Power Limited - India
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- GMR Energy Limited - India
- South Luzon Thermal Energy Corporation
- Agrawal Coal Company - India
- Posco Energy - South Korea
- Jindal Steel & Power Ltd - India
- Australian Coal Association
- MS Steel International - UAE
- Central Electricity Authority - India
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- Independent Power Producers Association of India
- Barasentosa Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sojitz Corporation - Japan
- Aboitiz Power Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Maheswari Brothers Coal Limited - India
- Sree Jayajothi Cements Limited - India
- New Zealand Coal & Carbon
- Gujarat Sidhee Cement - India
- TeaM Sual Corporation - Philippines
- Meralco Power Generation, Philippines
- Directorate Of Revenue Intelligence - India
- Australian Commodity Traders Exchange
- Sinarmas Energy and Mining - Indonesia
- San Jose City I Power Corp, Philippines
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- London Commodity Brokers - England
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- McConnell Dowell - Australia
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- Global Business Power Corporation, Philippines
- Thiess Contractors Indonesia
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Attock Cement Pakistan Limited
- Essar Steel Hazira Ltd - India
- Latin American Coal - Colombia
- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
- Eastern Energy - Thailand
- Rashtriya Ispat Nigam Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sindya Power Generating Company Private Ltd
- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- Rio Tinto Coal - Australia
- Tata Chemicals Ltd - India
- PTC India Limited - India
- The University of Queensland
- Globalindo Alam Lestari - Indonesia
- Ministry of Finance - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Power Finance Corporation Ltd., India
- Neyveli Lignite Corporation Ltd, - India
- Mercator Lines Limited - India
- Energy Development Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Bulk Trading Sa - Switzerland
- Star Paper Mills Limited - India
- GVK Power & Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Edison Trading Spa - Italy
- Bukit Makmur.PT - Indonesia
- Africa Commodities Group - South Africa
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- Indika Energy - Indonesia
- Borneo Indobara - Indonesia
- Lanco Infratech Ltd - India
- Coastal Gujarat Power Limited - India
- Meenaskhi Energy Private Limited - India
- Malabar Cements Ltd - India
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Oldendorff Carriers - Singapore
- ASAPP Information Group - India
- White Energy Company Limited
- Maharashtra Electricity Regulatory Commission - India
- Minerals Council of Australia
- Renaissance Capital - South Africa
- Karaikal Port Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Indo Tambangraya Megah - Indonesia
- SMC Global Power, Philippines
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- Kumho Petrochemical, South Korea
- Riau Bara Harum - Indonesia
- SMG Consultants - Indonesia
- Larsen & Toubro Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Metalloyd Limited - United Kingdom
- Sakthi Sugars Limited - India
- Toyota Tsusho Corporation, Japan
- Iligan Light & Power Inc, Philippines
- Heidelberg Cement - Germany
- Altura Mining Limited, Indonesia
- Simpson Spence & Young - Indonesia
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- Orica Australia Pty. Ltd.
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Ind-Barath Power Infra Limited - India
- CIMB Investment Bank - Malaysia
- Cement Manufacturers Association - India
- Vedanta Resources Plc - India
- Bhatia International Limited - India
- Wilmar Investment Holdings
- Deloitte Consulting - India
- Pipit Mutiara Jaya. PT, Indonesia
- Manunggal Multi Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Asmin Koalindo Tuhup - Indonesia
- The State Trading Corporation of India Ltd
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- Standard Chartered Bank - UAE
- Economic Council, Georgia
- PNOC Exploration Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- Kideco Jaya Agung - Indonesia
- Central Java Power - Indonesia
- Mjunction Services Limited - India
- Planning Commission, India
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Kohat Cement Company Ltd. - Pakistan
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- Bangladesh Power Developement Board
- Semirara Mining and Power Corporation, Philippines
- Parliament of New Zealand
- IHS Mccloskey Coal Group - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Banpu Public Company Limited - Thailand
- Ministry of Mines - Canada
- Intertek Mineral Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Bharathi Cement Corporation - India
- Videocon Industries ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Bhushan Steel Limited - India
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Xindia Steels Limited - India
- Carbofer General Trading SA - India
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Chettinad Cement Corporation Ltd - India
- Electricity Generating Authority of Thailand
- Coal and Oil Company - UAE
- Madhucon Powers Ltd - India
- Ambuja Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Mercuria Energy - Indonesia
- Marubeni Corporation - India
- Bayan Resources Tbk. - Indonesia
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