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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, 17 November 10
DRY BULK MARKET LOOKING FOR SUPPORT IN COAL TRADES AND INDIAN IRON ORE EXPORTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Nikos Roussanoglou, Hellenic Shipping reported that, the dry bulk market is lacking support to end its 13-day slide, as evidenced by Monday’s ...
Tuesday, 16 November 10
'VALLAR PLC' TO BECOME 'BUMI PLC' POST DEAL - THE JAKARTA POST
The Jakarta Post reported that, The United Kingdom’s Vallar Plc will change its name to Bumi Plc following a cash and stock transaction with t ...
Tuesday, 16 November 10
ROTHSCHILD BUYS INDONESIAN COAL STAKES FOR $3 BILLION - BLOOMBERG
Bloomberg reported that, Nathaniel Rothschild, the only son of U.K. financier Jacob Rothschild, agreed to invest $3 billion in two Indonesian coal c ...
Sunday, 14 November 10
THE FREIGHT MARKET CONTINUED ITS DOWN FALL - VISTAAR SINGAPORE
COALspot.com: The freight market continued its down fall with BDI down by 7.29 pct and closed at 2,313 points.
All other segments were also under ...
Saturday, 13 November 10
INDONESIA SHIPPED 8.73 % MORE COAL IN OCTOBER THAN A MONTH EARLIER
COALspot.com: Indonesia, the world largest coal exporter, shipped 23.55 mln mt of coal in October 2010, which is 8.73 percent more compared to Septe ...
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Showing 5526 to 5530 news of total 6871 |
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- OPG Power Generation Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Singapore Mercantile Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bharathi Cement Corporation - India
- Marubeni Corporation - India
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- Metalloyd Limited - United Kingdom
- Parry Sugars Refinery, India
- Romanian Commodities Exchange
- Manunggal Multi Energi - Indonesia
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- Kumho Petrochemical, South Korea
- Africa Commodities Group - South Africa
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Meralco Power Generation, Philippines
- Star Paper Mills Limited - India
- Australian Coal Association
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- Essar Steel Hazira Ltd - India
- Cement Manufacturers Association - India
- IEA Clean Coal Centre - UK
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- Gujarat Sidhee Cement - India
- Holcim Trading Pte Ltd - Singapore
- Sojitz Corporation - Japan
- The University of Queensland
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- PNOC Exploration Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wilmar Investment Holdings
- Australian Commodity Traders Exchange
- Borneo Indobara - Indonesia
- Iligan Light & Power Inc, Philippines
- Deloitte Consulting - India
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Banpu Public Company Limited - Thailand
- IHS Mccloskey Coal Group - USA
- Kohat Cement Company Ltd. - Pakistan
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Independent Power Producers Association of India
- GMR Energy Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Bhatia International Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jaiprakash Power Ventures ltd
- Madhucon Powers Ltd - India
- Economic Council, Georgia
- Sindya Power Generating Company Private Ltd
- Parliament of New Zealand
- Eastern Coal Council - USA
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- Goldman Sachs - Singapore
- Sree Jayajothi Cements Limited - India
- Bangladesh Power Developement Board
- Minerals Council of Australia
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- McConnell Dowell - Australia
- Indian Oil Corporation Limited
- Anglo American - United Kingdom
- Heidelberg Cement - Germany
- India Bulls Power Limited - India
- Intertek Mineral Services - Indonesia
- Ministry of Transport, Egypt
- Thai Mozambique Logistica
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- Ambuja Cements Ltd - India
- Energy Development Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Sinarmas Energy and Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- Barasentosa Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- Sical Logistics Limited - India
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- South Luzon Thermal Energy Corporation
- The Treasury - Australian Government
- Standard Chartered Bank - UAE
- ASAPP Information Group - India
- Sakthi Sugars Limited - India
- PTC India Limited - India
- Sarangani Energy Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Mercator Lines Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Indian Energy Exchange, India
- GN Power Mariveles Coal Plant, Philippines
- Formosa Plastics Group - Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Thiess Contractors Indonesia
- Wood Mackenzie - Singapore
- Latin American Coal - Colombia
- Trasteel International SA, Italy
- Kobexindo Tractors - Indoneisa
- Maheswari Brothers Coal Limited - India
- Larsen & Toubro Limited - India
- VISA Power Limited - India
- Jindal Steel & Power Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Aditya Birla Group - India
- Mjunction Services Limited - India
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Baramulti Group, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Finance - Indonesia
- Coalindo Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Ministry of Mines - Canada
- Ceylon Electricity Board - Sri Lanka
- Directorate Of Revenue Intelligence - India
- GVK Power & Infra Limited - India
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- Coastal Gujarat Power Limited - India
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Karaikal Port Pvt Ltd - India
- Commonwealth Bank - Australia
- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- Attock Cement Pakistan Limited
- Planning Commission, India
- GAC Shipping (India) Pvt Ltd
- Salva Resources Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Power Finance Corporation Ltd., India
- AsiaOL BioFuels Corp., Philippines
- Ind-Barath Power Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Dalmia Cement Bharat India
- Tata Chemicals Ltd - India
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Georgia Ports Authority, United States
- Oldendorff Carriers - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- London Commodity Brokers - England
- Neyveli Lignite Corporation Ltd, - India
- Lanco Infratech Ltd - India
- Energy Link Ltd, New Zealand
- Toyota Tsusho Corporation, Japan
- Central Electricity Authority - India
- Xindia Steels Limited - India
- Altura Mining Limited, Indonesia
- Edison Trading Spa - Italy
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- Mintek Dendrill Indonesia
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Semirara Mining and Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- Straits Asia Resources Limited - Singapore
- Rio Tinto Coal - Australia
- San Jose City I Power Corp, Philippines
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
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