Chinas coal supplydemand and their impact on international coal market George Guanghua Liu AAA Miner

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Chinas coal supply/demand and their impact
on international coal marketGeorge Guanghua
Liu AAA Minerals
International www.aaamineral.com
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Coal facts of China (1)

• 1.9 BMt of coal output in 2004
• 
  -- 1 in the world
• 1.85 BMt of coal consumption in 2004
• 
  -- 1 in the world
• 1,000 BMt recoverable reserves
• 
  -- 2 in the world
• 9.3 MMt of coal exports in 2003
• 
  -- 2 in the world
• Averaged domestic coal prices
• 
  -- the highest
• 67 of energy consumption mix is coal
• 
  -- one of highest

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Coal facts of China (2)

• 28,000 Coalmines with mean capacity of 50,000
  tonne per year, in which 95 mines less than 1
  MMtpa and 10,900 mines less than 30,000 tpa
• Most of these mines use backward mining methods,
  only 40 mechanized the overall coal recovery is
  lt 30
• To meet the highly increasing coal demand, gt 65
  of coal mines are operated over their capacity.
• 5 million miners (estimated) in these mines
  their averaged salary is lt200/month
• Yearly increase of gangue-pile by coalmine is
  over 130 MMt Yearly gas mission from mines is
  closed to 12 BM³
• About 5,000 miners killed in coal mines every
  year.

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Contents 1. Review
of domestic coal production and
consumption of China2. Outlook of Chinese
steaming coal supply vs. power
sectors demand 3. Outlook of Chinese coke
supply vs. metallurgical sectors
demand4. Tendency of Chinese coal export and
import5. Conclusions.
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Topic One

• Review of Chinese coal production
• and consumption
• They can be characterized by following point
• Chinese coal supply and demand underwent cyclic
  changes from middle 1970s the recent cycle began
  in year of 2000
• The changes are mainly caused by the governments
  policies and GDP growth
• The influence of international coal market is
  limited.

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Raw coal output from 1975 to 2005 (Bt)
from 482 MMt in 1975 through 1,374 MMt in 1996 to
998 MMt in 2000
from 998 MMt in 2000 to 1.7 BMt in 2003
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Domestic consumption of raw coalin China from
1980 to 2004(BMt)
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Comparison between domestic raw coal output,
consumption and GDP 1980 through 2004 (Bmt)

GDP

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Coal consumption mix of Chinain 2003 and 2004
(MMt)
Overall consumption mix of Chinese coal between
1995 and 2004 (MMt)
10-15
36-55
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Topic Two

• Outlook of Chinese thermal coal
• supply and demand
• Thermal coal in China is not only for power
  generation, but also for industrial and household
  fuel and heating the power generation consumes
  35 to 55 of it.
• Rapid increase of thermal coal supply demand
  is resulted by dramatic growth of power output in
  the last 4 years.
• Short transporting capacity and lower market
  coal prices challenge state allocated power coal
  supply, resulting in power shortfall.
• Over-capacity-operated mines and insufficient
  transporting infrastructure could not take pace
  with rapid increasing power coal demand more
  imported coal may be necessary.

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Domestic raw coal output and consumption
Power generation consumes 30 to 55 of total coal

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Domestic consumption of raw coalin China from
1980 to 2004(BMt)
Output history of power generation of China
the coal-fired power is 80 of the total
TWh
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(No Transcript)
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Outlook of domestic power coal demand in next 15
years, in comparison with raw coal demand(BMt)
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Topic Three

• Outlook of Chinese coke supply
• and demand
• China is the biggest coke producer, exporter
  and consumer of the world its coke supply
  increases repeatedly in pace with world coke
  output.
• Both Chinas and worlds demands speeded
  Chinas coke production.
• Increasing domestic demand, decreasing coking
  coal resources and environment protection is
  slowing down the coke exportation.

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Chinese coke output is a big boy in the
international coke market. In 2003 it made up
46 of the worlds total coke production.
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Historical coke outputs of China and world(MMt)
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Historical coke exports of China and the rest
world(MMt)
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Met. coal supply from 1995 to 2005 (MMt)
--- Met. coal resources is insufficient in China

• Met. coal includes raw coking coal and washed
  coking coal, the ratio of
• washed coal increased significant from end
  1990s.
• Exported coking coal is also included.

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Outlook of Chinese met. coal/coke supply/demand

• Domestic met. coal supply can meet the increasing
  demand in next 5 years, because
• 1) total coking capacity will
  increase from 195 MMt in 2004 to 240
• MMt at end 2006,
• 2) new coking coal mines will begin
  to produce in next years, and
• 3) growth rate of met industry is
  declining.
• Coke production in China tends to slow its growth
  rate, because
• 1) more small ovens will be shut,
• 2) demand tension began to relieve, and
• 3) coking coal supply remains tight as
  problems of resources
• transportation.
• Coke output may reach 210 MMt in 2005.
• Coking coal and coke exports will continue to
  reduce as the domestic demand and government
  control, as well as the increasing capacity of
  international coke makers.
• China may import more and more high quality
  coking coal from oversea, especially Australia,
  in coming years.

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Topic Four

• International coal trade of China
• China is the second largest coal exporter

MMt
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Chinas coal export increased rapidly from 2000
to 2003 began to decline in 2004 more coal
import may occur in the coming years. These
changes strongly affect the world coal market.

MMt
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Destinations of Chinese exported coal in 2004
The main importers of Chinese coal are Japan,
Taiwan, Korea, Europe, India and other SE
Asian counties.
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Exported coal types of China in 2004 (steaming
coal is 87 , anthracite 7 , coking coal 6 ).
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Outlook of import and export

• Export will gradually decline 2005 maintains the
  same level of 2004 at 80 MMt.
• Import tends to increase, mainly by south and
  south-eastern China.

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Topic five Conclusions

• 1) Growth rata of raw coal output will slow down
  in next two years, then output will decline as
  result of reducing capacity.

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Coal output capacity could not meet the demand
after 2006 more mine investment and importation
are the solution
BMt
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Conclusions
2) Growth of domestic demand for both coking and
steaming coal will slow down in late 2005 and
2006 3) Coal export is declining and import is
increasing, which results the changes of world
coal market 4) Chinese coal market is still
under control of the government.
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