China facing structural oversupply of coal in 2009

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

30 Oct 2009

China is facing an apparent structural oversupply of coal despite of recovering coal demand in downstream sectors, said Li Ting, an analyst with an information services provider. The oversupply can be seen in both the regions of production and the types of coal.
The consolidation of small coalmines in Shanxi province momentarily restrained the release of coal production, while coal output in Inner Mongolia and Shaanxi province saw large booms in 2009. Therefore, the amount of newly added coal supply has mainly condensed in Northwestern China including Inner Mongolia, Shaanxi, Gansu, Qinghai, Ningxia, and Xinjiang.
In the first eight months of 2009, the newly added coal output in the six provinces accounted for 36.8 percent of the national total, up 5.3 percentage points from the same period last year.
Li Ting held that the rapid growth of coal output in these areas accelerated China's coal production center in its movement westward, which not only increases the difficulties of coal transportation, but also raise the transportation cost and further lifts coal prices.
Further, of the newly added coal output from January to August of 2009, bituminous coal and lignite took 54.4 percent and 12 percent of the national total, up 2.5 and 1 percentage points on year, respectively. Besides, output of bituminous coal and lignite accounted for a combined 80 percent of the total newly added coal output in the above 6 provinces.

Source: Chinamining