Recently, Wang Xianzheng, President of the China National Coal Association, made this statement in his keynote speech at the opening ceremony of the 2018 Summer National Coal Trading Fair. He noted that from the perspective of production capacity scale, the overcapacity situation in the coal industry has not changed.
It is reported that since the end of 2016, while advancing coal overcapacity reduction, China has strengthened the approval of new coal mines and the efforts in capacity replacement. A large number of large-scale modern coal mines have been put into operation one after another, accelerating the release of production capacity.
A comprehensive analysis shows that at present, the annual production capacity of operational coal mines across the country is about 4 billion tons; the annual capacity of under-construction, expanded and renovated coal mines is about 1.1 billion tons (among which, the already formed annual production capacity is about 300 million tons); and annual coal imports stand at around 250 million tons. However, compared with the national annual coal consumption of about 4 billion tons, the situation of coal overcapacity has not changed.
In terms of coal prices, driven by the combined effects of the "medium- and long-term contract system" and the pricing mechanism of "base price + floating price", coal prices have remained within a reasonable range, and the industry's efficiency has improved.The price of medium- and long-term contracts for thermal coal (5,500 kcal seaborne coal) has always been stable within the green range, with an average price of 562 yuan per ton in the first half of the year, a year-on-year decrease of 9.5 yuan per ton. The price of coking coal has remained basically stable.In the first five months of this year, the profits of national large-scale coal enterprises reached 127.88 billion yuan, a year-on-year increase of 14.8%.(Source: China Energy Network)
