China`s Shenhua, Datong Group aim to reverse slide in coal exports
Source: www.chinamining.org Citation: Platts Date: April 17, 2015
Two of China`s largest coal producers -- Shenhua Group and Datong Coal Mining Group -- plan to revive their thermal coal exports to overseas customers, senior managers of the two companies said Thursday at the 13th Coaltrans China conference in Beijing.
China`s thermal coal exports to neighboring countries in Asia have progressively declined over the past decade to 2.59 million mt in 2014.
But slowing growth in China`s economy is creating a growing surplus for the domestic thermal coal market.
"We are trying to build our overseas customer base, and [our] exports are due to increase," Shenhua Group Vice General Manager Wang Xiaolin told the conference.
Xiaolin said Shenhua, China`s largest producer of thermal coal, used to export large volumes of coal in the recent past but, "due to strong domestic demand, exports have come down."
Shenhua is also following a central government instruction to reduce its domestic coal production, Xiaolin said.
"We will reduce our output by 50 million to 60 million mt [in 2015]," Xiaolin said. "The [government] policy applies to all coal mines, and Shenhua is no exception."
Datong Coal Mining Group, another of China`s larger coal producers, said it too is looking to reengage with the seaborne market for thermal coal.
"As to the increase of coal exports, we are studying this and we plan to increase the exports of coal," said Datong Coal Mining Group Vice General Manager Jin Hua.
Datong sold 200 million-300 million mt of its coal on the spot market in 2014, Hua said, without disclosing the amount of its term contract coal sales.
Commenting on the outlook for China`s market for imported thermal coal, which has slowed in recent months, Hua said: "If the Chinese market needs coal from other countries, it will come from other countries."
Wu Yin, a former deputy director general of China`s National Energy Agency, said the Chinese market was facing a "serious oversupply."
This is despite China`s domestic coal production falling to 3.56 billion mt in 2014, down 120 million mt from 2013, he said.
China imported 198.78 million mt of thermal coal -- not including lignite-- in 2014, down 6% year on year, according to China customs data.
Industry consolidation into 14 large business units has not prevented "the majority of coal enterprises from experiencing losses," and many state-owned coal mines in China had "social burdens" in terms of employee benefits which added to their costs, he said.
"China`s economy is in a new normal period," where economic growth and consequently energy demand was lower, he added.
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