China facing structural oversupply of coal in 2009
Monday, 02 Nov 2009
According to Mr Li Ting an analyst with an information services provider, China is facing an apparent structural oversupply of coal despite of recovering coal demand in downstream sectors.
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% of the national total up by 5.3 percentage points from the same period last year.
Mr 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% and 12% of the national total up by 2.5 and 1 percentage points on year respectively. Besides, output of bituminous coal and lignite accounted for a combined 80% of the total newly added coal output in the above 6 provinces.
