SteelOrbis Shanghai
Chinese coal
production and sales exhibited a stable increase through 2005, while coal prices increased strong at the beginning of the year but remained stable later. The supply and demand relation was relatively slower. The tight coal supply situation has been slightly alleviated.
A. Statistics for 2005
1. Raw coal
production: According to the statistics,
China produced 2.11 billion metric tons of raw coal in 2005, up 8 percent year on year. This is the smallest growth rate in the last three years.
2. Imports and exports:
China's total coal exports reduced 17 percent or 14.6 million metric tons year on year to 71.07 million metric tons in 2005. Meanwhile, the coal imports increased 40.1 percent or 7.47 million metric tons to 26.17 million metric tons.
3. Coal inventory: The total usable coal inventory increased 35 percent or 36.23 million metric tons to 140 million metric tons.
4. Coal prices: In 2005, the average price of commercial coal was RMB 270.2/mt ($33.6), up RMB 63.77/mt ($8) or 30.8 percent year on year. The average price of electricity generation coal increased 30.9 percent or RMB 50.24/mt ($6) to RMB 212.75/mt ($26.5).
5. Profits: The coal industry realized RMB 55.2 billion ($6.9 billion) profit, up RMB 24.3 billion ($3 billion) or 78.8 percent from 2004.
6. Fixed assets investment: The coal industry's fixed assets investment increased 65.5 billion ($8.6 billion) or 65.5 percent to RMB 114.4 billion ($14.25 billion).
B. The outlook of the coal industry in 2005
1.
China's coal
production and sales saw a stable increase. Driven by the rapid growth in
China's economy, the coal
production, transportation and sales increased around 8 percent year on year. However, these growth rates are not as striking as those in 2004.
China's macro-economic control policy has curbed the growth.
2. The coal inventory increased sharp, while the prices were more stable. The coal prices in the first quarter were at a high level due to the short supply. However, in the second and third quarters, market prices of coal declined due to the ease in demand. The prices picked up again in the fourth quarter thanks to winter.
3. The
investments in coal mine
construction heated up, leading to a heavier overcapacity pressure. In the last four years, the fixed assets investment of coal industry increased 31 percent, 43.3 percent, 60.8 percent and 65.6 percent every year, reaching RMB 114.4 billion ($5.16 billion) in 2005 from RMB 28.6 billion ($3.56 billion) in 2002.
4. 2005 saw many coal mine accidents. The casualties of coal mine accidents totaled 5,938 people, ranking first all over the world. Among the total, the number of severe accidents with more than 30 casualties is 11.
5. There was a wide gap between the nationwide planned price and the market price of electricity
production coal, reaching RMB 30-80/mt ($3.7-10) and even to RMB 100/mt ($12.5) from time to time. However, most of the electricity coal under the planned price scope is high quality steam coal, differing from the coal sold in the market.
China plans to regroup its coal mining industry into 13 conglomerates to improve safety and efficiency, as small mines with less capital and lower
production capacity are more prone to accidents.