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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, 04 January 11
BALI, INDONESIA HOST OF WORLD RENEWABLE ENERGY AND ENERGY EFFICIENCY CONFERENCE
Press Release - Indonesian Renewable Energy Society (METI – IRES) has launched the plan for organizing the international gathering ...
Tuesday, 04 January 11
DRY BULK MARKET TO RANGE BETWEEN 1,700 AND 2,600 POINTS IN THE FIRST QUARTER OF 2011, ANALYSTS SAY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
As we entered 2011, ship owners and analysts, as well as shipbrokers are looking into their “crystal balls” to try to decode the dry bul ...
Monday, 03 January 11
TAXATION FOR COAL MINING COMPANIES IN INDONESIA - A TAX EXPERTS VIEW
COALspot.com - Mrs. Sri Wahyuni Sujono, managing partner of SF Consulting has wrote an exclusive report regarding taxation for coal mining companies ...
Sunday, 02 January 11
JAISWAL TO SEEK COAL MINES IN AFRICA - HINDUSTAN TIMES
Coal Minister Sriprakash Jaiswal will talk with his counterparts in South Africa and Mozambique during his visit from January 5 to secure coal asset ...
Saturday, 01 January 11
COAL PRODUCTION EXPECTED TO EXCEED 340 MILLION TONS THIS YEAR - THE JAKARTA POST
The Jakarta Post reported that, Indonesian coal miners expect to produce 340 million tons of coal in 2011, an increase of 23 percent from 275 millio ...
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- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- Meralco Power Generation, Philippines
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- Krishnapatnam Port Company Ltd. - India
- Global Green Power PLC Corporation, Philippines
- Chamber of Mines of South Africa
- Marubeni Corporation - India
- Sakthi Sugars Limited - India
- Indonesian Coal Mining Association
- TNB Fuel Sdn Bhd - Malaysia
- Altura Mining Limited, Indonesia
- GMR Energy Limited - India
- Asmin Koalindo Tuhup - Indonesia
- MS Steel International - UAE
- Uttam Galva Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Romanian Commodities Exchange
- The University of Queensland
- Manunggal Multi Energi - Indonesia
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Oldendorff Carriers - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Carbofer General Trading SA - India
- Borneo Indobara - Indonesia
- Eastern Coal Council - USA
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- Karbindo Abesyapradhi - Indoneisa
- Sindya Power Generating Company Private Ltd
- Indian Energy Exchange, India
- Parliament of New Zealand
- Billiton Holdings Pty Ltd - Australia
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- Interocean Group of Companies - India
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
- Minerals Council of Australia
- Alfred C Toepfer International GmbH - Germany
- Parry Sugars Refinery, India
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- Aboitiz Power Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Mercator Lines Limited - India
- CIMB Investment Bank - Malaysia
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- Singapore Mercantile Exchange
- Sarangani Energy Corporation, Philippines
- Latin American Coal - Colombia
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- Malabar Cements Ltd - India
- Antam Resourcindo - Indonesia
- Central Electricity Authority - India
- Riau Bara Harum - Indonesia
- Coastal Gujarat Power Limited - India
- Makarim & Taira - Indonesia
- Planning Commission, India
- Straits Asia Resources Limited - Singapore
- Sical Logistics Limited - India
- ASAPP Information Group - India
- Binh Thuan Hamico - Vietnam
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Electricity Generating Authority of Thailand
- Mintek Dendrill Indonesia
- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Indika Energy - Indonesia
- Aditya Birla Group - India
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- Commonwealth Bank - Australia
- Gujarat Mineral Development Corp Ltd - India
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
- Therma Luzon, Inc, Philippines
- Coal and Oil Company - UAE
- Kalimantan Lumbung Energi - Indonesia
- PTC India Limited - India
- Tata Chemicals Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- Star Paper Mills Limited - India
- Pendopo Energi Batubara - Indonesia
- Indo Tambangraya Megah - Indonesia
- SN Aboitiz Power Inc, Philippines
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Independent Power Producers Association of India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Ministry of Transport, Egypt
- Mjunction Services Limited - India
- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- Meenaskhi Energy Private Limited - India
- Timah Investasi Mineral - Indoneisa
- IEA Clean Coal Centre - UK
- Merrill Lynch Commodities Europe
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Salva Resources Pvt Ltd - India
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- Global Business Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Dalmia Cement Bharat India
- Neyveli Lignite Corporation Ltd, - India
- Kepco SPC Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Indogreen Group - Indonesia
- Eastern Energy - Thailand
- The State Trading Corporation of India Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- Indian Oil Corporation Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement - Thailand
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Orica Mining Services - Indonesia
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- Wood Mackenzie - Singapore
- Iligan Light & Power Inc, Philippines
- Thai Mozambique Logistica
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Central Java Power - Indonesia
- Miang Besar Coal Terminal - Indonesia
- McConnell Dowell - Australia
- Ambuja Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Xindia Steels Limited - India
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- Africa Commodities Group - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- Maheswari Brothers Coal Limited - India
- Kobexindo Tractors - Indoneisa
- Anglo American - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Agrawal Coal Company - India
- Bulk Trading Sa - Switzerland
- Electricity Authority, New Zealand
- PowerSource Philippines DevCo
- Tamil Nadu electricity Board
- Vedanta Resources Plc - India
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- Savvy Resources Ltd - HongKong
- Simpson Spence & Young - Indonesia
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Deloitte Consulting - India
- Trasteel International SA, Italy
- Kartika Selabumi Mining - Indonesia
- Power Finance Corporation Ltd., India
- New Zealand Coal & Carbon
- Semirara Mining and Power Corporation, Philippines
- Videocon Industries ltd - India
- OPG Power Generation Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- GVK Power & Infra Limited - India
- Wilmar Investment Holdings
- Bayan Resources Tbk. - Indonesia
- International Coal Ventures Pvt Ltd - India
- Cement Manufacturers Association - India
- VISA Power Limited - India
- Baramulti Group, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- Vizag Seaport Private Limited - India
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
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