Dark days ahead for China’s coal producers as demand slumps

~~IJING - With weakening demand amid a slowing economy, coal producers in China are bracing for a drag in 2015 sales. Shenhua Group, China’s biggest coal company, has already begun to experience a sharp slowdown in sales last month, selling only 34 million tonnes, a 30.2% year-on-year decrease.

China National Coal Group Corp. also reported a 16.1% on-year drop in sales for the month. Industry authority Dai Bing said: “Most of the power stations in China already have stockpiles of thermal coal, and the future power demand scenario does not offer much room for comfort as it remains depressed due to the economic slowdown.”

The coal industry has also been dealing with the tenacious issue of overcapacity, which increases downward pressure on the future of its business.

Despite the Ministry of Finance’s recent announcement that the Government will cut export tariffs on coal from 10% to 3% (starting from January 1), Dai remains sceptical about their positive influence since China’s coal exports are negligible. 2013 saw a ratio of 7.5 million exported tons of coal to 330 million imported tons for China – China became a net importer of coal in 2009. www.webershandwick.cn (ATI).