Chinese Support the Change of Coal Industry

Chinese coal market is going to suffer from oversupply in 2014, and maybe the prices will still drop. In the first two months of 2014, China consumed 824.3 billion kilowatt-hours of electricity, up 4.5 percent year-on-year. But the growth is 1 percentage point lower than the same period last year, data from the National Energy Administration shows.

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The thermal coal price has dropped more than 12 percent to 533 yuan ($85.6) a ton since the beginning of this year, according to industry information portal cqcoal.com. Experts say the price may drop further given overcapacity and weak demand. Besides weak demand, domestic coal producers are also facing competition from cheaper imported coal. Guan noted the price of imported -coking coal could be 20 to 30 yuan a ton lower than domestic coking coal.

To curb overcapacity, the State Administration of Coal Mine Safety ordered no new coal mines with annual production capacity of 300,000 tons will be allowed to open this year and those with a capacity of 90,000 tons will continue to be shut down. For the larger coal companies, there is still room for them to improve their efficiency and get the corresponding gains.