Under the background of gradual release of production capacity in China's coal market in 2008, the overall balance of supply and demand will not change. However, under the constraints of transportation and other factors, the regional, seasonal and structural contradictions of coal supply are prominent.
The coal supply situation in China is not originally tight. In 2007, China's raw coal output reached 2.536 billion tons. In the past five years, the annual coal production has grown at an average rate of about 200 million tons. Last year, China's coal sales volume was 2.398 billion tons, and railway coal transportation volume reached 1.221 billion tons, an increase of 100 million tons over the previous year.
After the Spring Festival, the National Development and Reform Commission received reports from some steel mills and chemical fertilizer plants in succession due to guaranteeing the supply of coal in the previous period and reducing the supply of other types of coal. This reflects the shortage of coking coal and chemical coal, and the emergence of coking coal and fat coal. As a result of the buying, the market price has further increased. Recently, the National Development and Reform Commission issued an emergency notice to all relevant departments to ensure that the current fertilizer companies use coal.
In recent years, China has been shutting down small coal mines that do not meet industrial policies and poor security conditions. Some opinion believes that it is due to the closure of a large number of small coal mines that led to tight supply of coal. I think that although shutting down small coal mines will, to a certain extent, reduce coal production capacity, in fact, China's coal production is increasing every year, and the normal supply of coal has not been affected because of the closure of small coal mines. At present, the overall supply of coal is balanced, and supply in some areas is also common. In the middle and later stages of the snowstorm, the government requested township coal mines that meet safety conditions to resume production. In response, the market once worried that the government's change of attitude toward small coal mines will lead to an increase in illegal mining, which will place greater pressure on coal prices.
From a macro perspective, China’s economy will achieve sustained growth in 2008, but the rate of growth will decline slightly. The coal industry is a cyclically obvious industry, and the degree of industry prosperity is closely related to the development of the macro economy. The coal industry has experienced rapid growth for five consecutive years and there should be a structural adjustment.
From the perspective of coal demand, the major coal-consuming industries in 2008 were electricity, steel, building materials, and chemical industries. Among them, the power industry still has room for sustainable development, but the increase in coal consumption will further decline. It is estimated that the demand for coal in four industries in 2008 will increase by 200 million tons compared with 2007, and the total coal demand for the whole year will be about 2.7 billion tons, an increase of about 7%. Among them, the demand for thermal coal is about 1.6 billion tons, an increase of about 10%. At present, the total production capacity of existing coal mines and under construction coal mines is about 3.1 billion tons, which can meet the demand.
With the high price of coal in the international market, coal prices in countries such as Vietnam and Indonesia have risen, and China’s coal imports will also be limited to a certain extent. From January to March of this year, spot price of BJ coal in Australia has increased by leaps and bounds, rising from around US$90/ton to above US$131/ton, and the gap between international and domestic coal prices has further widened. Countries such as Vietnam, Australia, and Indonesia that reduce their coal exports will also curb China’s coal imports. China's coal supply will still mainly rely on domestic supply. The rise in international coal prices will be the driving force for the stable export of coal in China.
At present, the coal exports from coal-producing countries such as Australia, Indonesia and Vietnam to the Chinese market will continue to increase. Domestic enterprises can choose the coal market price according to the international market supply situation and play a more important role in the international pricing of coal. In addition, Chinese enterprises will increase the intensity of foreign mining, strive to develop coal resources in cooperation, and expand channels of coal imports to increase coal supply capacity.
The coal supply situation in China is not originally tight. In 2007, China's raw coal output reached 2.536 billion tons. In the past five years, the annual coal production has grown at an average rate of about 200 million tons. Last year, China's coal sales volume was 2.398 billion tons, and railway coal transportation volume reached 1.221 billion tons, an increase of 100 million tons over the previous year.
After the Spring Festival, the National Development and Reform Commission received reports from some steel mills and chemical fertilizer plants in succession due to guaranteeing the supply of coal in the previous period and reducing the supply of other types of coal. This reflects the shortage of coking coal and chemical coal, and the emergence of coking coal and fat coal. As a result of the buying, the market price has further increased. Recently, the National Development and Reform Commission issued an emergency notice to all relevant departments to ensure that the current fertilizer companies use coal.
In recent years, China has been shutting down small coal mines that do not meet industrial policies and poor security conditions. Some opinion believes that it is due to the closure of a large number of small coal mines that led to tight supply of coal. I think that although shutting down small coal mines will, to a certain extent, reduce coal production capacity, in fact, China's coal production is increasing every year, and the normal supply of coal has not been affected because of the closure of small coal mines. At present, the overall supply of coal is balanced, and supply in some areas is also common. In the middle and later stages of the snowstorm, the government requested township coal mines that meet safety conditions to resume production. In response, the market once worried that the government's change of attitude toward small coal mines will lead to an increase in illegal mining, which will place greater pressure on coal prices.
From a macro perspective, China’s economy will achieve sustained growth in 2008, but the rate of growth will decline slightly. The coal industry is a cyclically obvious industry, and the degree of industry prosperity is closely related to the development of the macro economy. The coal industry has experienced rapid growth for five consecutive years and there should be a structural adjustment.
From the perspective of coal demand, the major coal-consuming industries in 2008 were electricity, steel, building materials, and chemical industries. Among them, the power industry still has room for sustainable development, but the increase in coal consumption will further decline. It is estimated that the demand for coal in four industries in 2008 will increase by 200 million tons compared with 2007, and the total coal demand for the whole year will be about 2.7 billion tons, an increase of about 7%. Among them, the demand for thermal coal is about 1.6 billion tons, an increase of about 10%. At present, the total production capacity of existing coal mines and under construction coal mines is about 3.1 billion tons, which can meet the demand.
With the high price of coal in the international market, coal prices in countries such as Vietnam and Indonesia have risen, and China’s coal imports will also be limited to a certain extent. From January to March of this year, spot price of BJ coal in Australia has increased by leaps and bounds, rising from around US$90/ton to above US$131/ton, and the gap between international and domestic coal prices has further widened. Countries such as Vietnam, Australia, and Indonesia that reduce their coal exports will also curb China’s coal imports. China's coal supply will still mainly rely on domestic supply. The rise in international coal prices will be the driving force for the stable export of coal in China.
At present, the coal exports from coal-producing countries such as Australia, Indonesia and Vietnam to the Chinese market will continue to increase. Domestic enterprises can choose the coal market price according to the international market supply situation and play a more important role in the international pricing of coal. In addition, Chinese enterprises will increase the intensity of foreign mining, strive to develop coal resources in cooperation, and expand channels of coal imports to increase coal supply capacity.