China Coal Sees Slowdown of Demand - The Indonesia Today

China Coal Energy Company Ltd, one of the largest coal producers in China, sees the growth of coal demand in the country will slow down due to macro-control policies, especially the renewable energy development goal, energy saving, and emission reduction requirement.

China Coal said in its 2010 Annual Report that as the Chinese government will strengthen its control on macro-economy to maintain the steady growth of economy, the total coal consumption by thermal power, steel, building materials and chemical industries in China will grow continuously in 2011, which will provide a favorable environment for sound development of coal industry.

"The coal consumption for 2011 is expected to maintain a moderate expansion. However, influenced by the macro-control policies especially the renewable energy development goal and the energy saving and emission reduction requirement for the “Twelfth Five-year Period”, the growth of demand will slow down to some extent," the company said.

Regarding coal supply, China Coal said that as a result of the gradual completion of large-scale coal bases and production resumption of local consolidated coal mines, major coal producers such as Shanxi and Inner Mongolia will release their production capacities in 2011.

Meanwhile, the operation renovation of a number of railways including Baotou-Xi’an Railway and Taiyuan-Zhongwei-Yinchuan Railway will accelerate the release of coal production capacity in north Shaanxi and west Inner Mongolia. It is expected that coal production volume in the PRC will post a year-on-year increase of approximately 300 million tons in 2011.

On coal import and export, In 2010, China imported 165 million tons of coal, representing a year-on-year increase of 30.99%; and the net import amounted to 146 million tons, representing an increase of 40.96%.

"The year 2011 is expected to witness considerable net coal import as driven by growing demand from south-eastern coastal areas of China and the appreciation of Renminbi, despite of a gradual increase in global coal prices," China Coal said.

On coal prices, China Coal said based on the scenario of basically balanced supply and demand, coal prices are expected to maintain steady as a whole in 2011. The contractual prices of major thermal coal in the year will maintain as the level of last year due to the regulatory control imposed by national macro-control policies.

"There will still be significant difference between spot prices and major thermal coal contractual prices. When coal consumption increases in peak season and transportation capacity gets tight in some areas, spot prices in certain areas and periods are expected to be stable or on the upside."