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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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Saturday, 20 November 10
ITALIAN STEAM COAL MARKET HAS RECOVERED - ITALIAN COAL ASSOCIATION
Press Release - This year Italy will import 17 million tons of steam coal, up 3% from 2009, and 5.5 million tons of coking coal and PCI, up 37% over ...
Friday, 19 November 10
WE'LL THINK ABOUT COAL TOMORROW - ANALYSIS
The future of coal generation in Russia is in question. The largest energy companies have abandoned their initial plans to switch their therma ...
Friday, 19 November 10
DRY BULK MARKET ON THE ROPES WITH BDI PLUNGING TO 2,164 POINTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the panamax markets suffering the most this week, but a ray of hope for the capesize market, which appears to be stabilizing after days of fall ...
Thursday, 18 November 10
WORLD COAL ASSOCIATION WELCOMES NEW CHAIRMAN & SHENHUA GROUP AS NEW MEMBER 17 NOVEMBER 2010
Press Release – The premier global coal industry association marks its 25th anniversary with a new Chairman and welcomes China’s lar ...
Thursday, 18 November 10
MUNDRA PORT AWARDED BEST PRIVATE PORT - COMMODITY ONLINE / HELLENIC SHIPPING
Adani Group owned, Mundra Port has been awarded the Annual Indian Maritime Gateway Award for the Best Private Port of the Year for the third consecu ...
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- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- SMG Consultants - Indonesia
- Bhushan Steel Limited - India
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Coal and Oil Company - UAE
- Parliament of New Zealand
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- Malabar Cements Ltd - India
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- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- London Commodity Brokers - England
- LBH Netherlands Bv - Netherlands
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- Essar Steel Hazira Ltd - India
- PowerSource Philippines DevCo
- Electricity Generating Authority of Thailand
- MS Steel International - UAE
- Eastern Coal Council - USA
- Commonwealth Bank - Australia
- Global Coal Blending Company Limited - Australia
- Electricity Authority, New Zealand
- White Energy Company Limited
- Lanco Infratech Ltd - India
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- Tamil Nadu electricity Board
- Orica Mining Services - Indonesia
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- Australian Commodity Traders Exchange
- Dalmia Cement Bharat India
- Samtan Co., Ltd - South Korea
- Kobexindo Tractors - Indoneisa
- The Treasury - Australian Government
- Africa Commodities Group - South Africa
- McConnell Dowell - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ASAPP Information Group - India
- Indika Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Mercator Lines Limited - India
- Coastal Gujarat Power Limited - India
- Ministry of Finance - Indonesia
- Coalindo Energy - Indonesia
- Meralco Power Generation, Philippines
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Directorate Of Revenue Intelligence - India
- Rio Tinto Coal - Australia
- Sojitz Corporation - Japan
- Altura Mining Limited, Indonesia
- Bukit Baiduri Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- Interocean Group of Companies - India
- Marubeni Corporation - India
- Power Finance Corporation Ltd., India
- IEA Clean Coal Centre - UK
- Xindia Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Siam City Cement - Thailand
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- Siam City Cement PLC, Thailand
- Deloitte Consulting - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- Ambuja Cements Ltd - India
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Neyveli Lignite Corporation Ltd, - India
- Rashtriya Ispat Nigam Limited - India
- Vedanta Resources Plc - India
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- Bharathi Cement Corporation - India
- Cement Manufacturers Association - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sinarmas Energy and Mining - Indonesia
- Romanian Commodities Exchange
- Aditya Birla Group - India
- PetroVietnam Power Coal Import and Supply Company
- Kartika Selabumi Mining - Indonesia
- Edison Trading Spa - Italy
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- Star Paper Mills Limited - India
- Antam Resourcindo - Indonesia
- South Luzon Thermal Energy Corporation
- Semirara Mining Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- Banpu Public Company Limited - Thailand
- Energy Development Corp, Philippines
- Jindal Steel & Power Ltd - India
- Ministry of Mines - Canada
- CIMB Investment Bank - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Eastern Energy - Thailand
- Borneo Indobara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhoruka Overseas - Indonesia
- Binh Thuan Hamico - Vietnam
- Oldendorff Carriers - Singapore
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- Simpson Spence & Young - Indonesia
- Makarim & Taira - Indonesia
- GAC Shipping (India) Pvt Ltd
- Directorate General of MIneral and Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Baramulti Group, Indonesia
- The University of Queensland
- Iligan Light & Power Inc, Philippines
- PTC India Limited - India
- Central Java Power - Indonesia
- Tata Chemicals Ltd - India
- CNBM International Corporation - China
- Trasteel International SA, Italy
- Gujarat Sidhee Cement - India
- Indonesian Coal Mining Association
- Straits Asia Resources Limited - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Minerals Council of Australia
- Posco Energy - South Korea
- ICICI Bank Limited - India
- Economic Council, Georgia
- Medco Energi Mining Internasional
- Gujarat Mineral Development Corp Ltd - India
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- Singapore Mercantile Exchange
- Petron Corporation, Philippines
- Thiess Contractors Indonesia
- Larsen & Toubro Limited - India
- Port Waratah Coal Services - Australia
- Merrill Lynch Commodities Europe
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Electricity Authority - India
- Global Green Power PLC Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Indogreen Group - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Transport, Egypt
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- Price Waterhouse Coopers - Russia
- TNB Fuel Sdn Bhd - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- The State Trading Corporation of India Ltd
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Wilmar Investment Holdings
- GN Power Mariveles Coal Plant, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Heidelberg Cement - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- IHS Mccloskey Coal Group - USA
- Global Business Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Mjunction Services Limited - India
- Savvy Resources Ltd - HongKong
- Pendopo Energi Batubara - Indonesia
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Riau Bara Harum - Indonesia
- Australian Coal Association
- Indo Tambangraya Megah - Indonesia
- Kaltim Prima Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- PNOC Exploration Corporation - Philippines
- Grasim Industreis Ltd - India
- GMR Energy Limited - India
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- Videocon Industries ltd - India
- Sree Jayajothi Cements Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bhatia International Limited - India
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
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