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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, 25 November 10
JSW ENERGY BUYS CANADIAN COAL FIRM FOR $411 MN - NDTV PROFIT
NDTV Profit reported that, Sajjan Jindal-owned JSW Energy on Wednesday said it has entered into an agreement to buy out British Virgin Islands-based ...
Thursday, 25 November 10
DRY BULK MARKET STILL GOING STRONG THIS WEEK, CAPESIZE SECTOR LOSING STEAM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market kept its upward momentum yesterday, with the industry’s benchmark, the Baltic Dry Index (BDI) gaining a further 0.64% to e ...
Wednesday, 24 November 10
COAL PRODUCTION PREDICTED TO CLIMB IN SUNNIER 2011 - THE JAKARTA GLOBE
The Jakarta Globe reported that, Indonesia’s coal producers are expected to increase output by 13 percent in 2011, thanks to predicted better ...
Monday, 22 November 10
RUSSIA'S KTK HAS PRODUCED 4.59 MLN TONNES OF COAL IN FIRST 9 MONTHS OR AN INCREASE OF 5% YEAR-ON-YEAR
COALspot.com (Press Release) - KTK has produced 4.59 mln tonnes of coal in first nine months or an increase of 5% year-on-year.
Kuzbasskaya Topli ...
Sunday, 21 November 10
THE FREIGHT MARKET MAY SLIGHTLY FIRM UP NEXT WEEK - CAPT. REDDY
COALspot.com: The freight market continued its down fall with BDI down by 6.83 pct and closed at 2,155 points.
According to Vistaar Shipping of S ...
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- Chettinad Cement Corporation Ltd - India
- International Coal Ventures Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Tata Chemicals Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- GAC Shipping (India) Pvt Ltd
- The University of Queensland
- Indika Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- Parliament of New Zealand
- Semirara Mining and Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Sakthi Sugars Limited - India
- Petron Corporation, Philippines
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- Kapuas Tunggal Persada - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Australia Pty. Ltd.
- Heidelberg Cement - Germany
- Simpson Spence & Young - Indonesia
- Carbofer General Trading SA - India
- Orica Mining Services - Indonesia
- Power Finance Corporation Ltd., India
- Aboitiz Power Corporation - Philippines
- Oldendorff Carriers - Singapore
- Standard Chartered Bank - UAE
- Jindal Steel & Power Ltd - India
- Coal and Oil Company - UAE
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Banpu Public Company Limited - Thailand
- CIMB Investment Bank - Malaysia
- Global Coal Blending Company Limited - Australia
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- Australian Coal Association
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Singapore Mercantile Exchange
- McConnell Dowell - Australia
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- Bhoruka Overseas - Indonesia
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- Mjunction Services Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Eastern Coal Council - USA
- European Bulk Services B.V. - Netherlands
- Straits Asia Resources Limited - Singapore
- Kartika Selabumi Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PNOC Exploration Corporation - Philippines
- Edison Trading Spa - Italy
- Jorong Barutama Greston.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Trasteel International SA, Italy
- Sarangani Energy Corporation, Philippines
- The State Trading Corporation of India Ltd
- Bharathi Cement Corporation - India
- London Commodity Brokers - England
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- Kumho Petrochemical, South Korea
- Bahari Cakrawala Sebuku - Indonesia
- South Luzon Thermal Energy Corporation
- Aditya Birla Group - India
- Attock Cement Pakistan Limited
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
- Bulk Trading Sa - Switzerland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- Bhushan Steel Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- Borneo Indobara - Indonesia
- Wilmar Investment Holdings
- Sical Logistics Limited - India
- Independent Power Producers Association of India
- VISA Power Limited - India
- Parry Sugars Refinery, India
- Neyveli Lignite Corporation Ltd, - India
- White Energy Company Limited
- Kohat Cement Company Ltd. - Pakistan
- Planning Commission, India
- Star Paper Mills Limited - India
- Tamil Nadu electricity Board
- The Treasury - Australian Government
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- Vizag Seaport Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Electricity Generating Authority of Thailand
- Pendopo Energi Batubara - Indonesia
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Videocon Industries ltd - India
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Indonesian Coal Mining Association
- Sree Jayajothi Cements Limited - India
- IHS Mccloskey Coal Group - USA
- Kobexindo Tractors - Indoneisa
- Africa Commodities Group - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- Coastal Gujarat Power Limited - India
- Posco Energy - South Korea
- Goldman Sachs - Singapore
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- PTC India Limited - India
- Thiess Contractors Indonesia
- Central Electricity Authority - India
- Medco Energi Mining Internasional
- Rashtriya Ispat Nigam Limited - India
- Altura Mining Limited, Indonesia
- Global Green Power PLC Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- Energy Development Corp, Philippines
- Coalindo Energy - Indonesia
- CNBM International Corporation - China
- Chamber of Mines of South Africa
- Interocean Group of Companies - India
- Central Java Power - Indonesia
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- Siam City Cement - Thailand
- GMR Energy Limited - India
- Sojitz Corporation - Japan
- Riau Bara Harum - Indonesia
- Port Waratah Coal Services - Australia
- Kaltim Prima Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Bangladesh Power Developement Board
- Miang Besar Coal Terminal - Indonesia
- Latin American Coal - Colombia
- Anglo American - United Kingdom
- Sindya Power Generating Company Private Ltd
- Grasim Industreis Ltd - India
- Siam City Cement PLC, Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ICICI Bank Limited - India
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- Malabar Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Mintek Dendrill Indonesia
- IEA Clean Coal Centre - UK
- SMC Global Power, Philippines
- Formosa Plastics Group - Taiwan
- Global Business Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- Kideco Jaya Agung - Indonesia
- Maheswari Brothers Coal Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Vedanta Resources Plc - India
- Directorate General of MIneral and Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Australian Commodity Traders Exchange
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- Renaissance Capital - South Africa
- Antam Resourcindo - Indonesia
- Energy Link Ltd, New Zealand
- GVK Power & Infra Limited - India
- Dalmia Cement Bharat India
- Directorate Of Revenue Intelligence - India
- Semirara Mining Corp, Philippines
- Indian Energy Exchange, India
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
- MS Steel International - UAE
- Meenaskhi Energy Private Limited - India
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