In the next two years, the coal market in our country will experience an oversupply
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This post was last edited by jordan569 on 2013-1-6 at 22:26. Recently, the Ministry of Land and Resources decided to continue suspending the acceptance of new applications for coal exploration rights across the country. Analysts point out that **there is an attempt to alleviate the price pressures caused by excess coal production capacity by controlling the total supply. However, downstream demand may continue to deteriorate, causing coal prices to keep falling. According to statistics from the Ministry of Land and Resources, China’s existing coal resources and enterprises have sufficient resource guarantees. Currently, there are over 2,300 coal exploration rights across the country, covering a total resource reserve of around 500 billion tons. The 23,000 coal mining enterprises in the country utilize more than 270 billion tons of these resources, accounting for 23.4% of the total available reserves; the remaining resources amount to over 900 billion tons, representing 76.6% of the total reserves. Behind this massive amount of resources, domestic coal production capacity is also expanding rapidly. According to statistics from the China Coal Association, China’s coal production in 2008 was 2.716 billion tons; compared with the actual production level, there was an idle production capacity of 400 million tons. Moreover, the currently approved production capacity has already exceeded the target output set in the National Mineral Resources Plan. According to the National Mineral Resources Plan approved by the State Council not long ago, China’s planned coal production for 2010 was 2.9 billion tons. The gap between China’s coal production in 2008 and the planned coal production in 2010 was less than 200 million tons. Between 2007 and 2008, more than 520 coal exploration rights across the country were converted into mining rights. Of these, the more than 70 mining rights established by the Ministry of Land and Resources (including those resulting from expansions or renovations) were expected to add a production capacity of over 210 million tons. If we also include the more than 450 mining rights established by various provinces, then by 2010, the country’s coal production capacity would **exceed the planned levels**. Despite the accelerating expansion of idle production capacity in the country and the decline in coal market prices due to the international financial crisis, some private investors still maintain high expectations for coal demand after the crisis. Since the end of 2008, there have been many applications from private investors for coal exploration and mining. Wang Ye, an analyst in the coal sector at CITIC Securities, believes that the pressure of supply exceeding demand in China’s coal market will remain high over the next two years. **It is essential to control the allocation of coal exploration rights at the source, as this can help balance the current oversupply in the coal market and prevent overcapacity resulting from excessive investment in exploration. This is of great significance for the long-term development of China’s coal industry. Nevertheless, in the short term, due to the weakening demand from downstream industries that rely on electricity such as steel and cement, power generation by electricity companies will decline, and the coal industry will once again face inventory pressures. Analysts at CICC believe that domestic coal prices will continue to face downward pressure after April. Due to insufficient demand, coal intermediaries cannot sustain price inversions for long, and this will eventually lead to pressure on the currently rising prices of coal at the mine site, resulting in a second round of price declines. Furthermore, the relatively weak international coal prices will also exert pressure on domestic coal prices in the future. For example, the prices of coking coal agreed upon by Australia for 2009 are 129 dollars per ton, while the price of thermal coal is around 70 dollars per ton, and the price of injection coal is 90 dollars per ton – all of which are significantly lower than China’s current spot coal prices. . Note $ # , $ $
Even with overcapacity, coal companies insisted on a 4% price increase in 2009, which was excessive.
Coal enterprises are not firms with flexible pricing; their prices cannot simply be raised at will.
By how much have coal production costs risen in these two years? . . Small private enterprises are manageable, but the production costs of large state-owned coal companies are rising steadily. Safety, environmental protection, and so on – now a resource tax is to be imposed as well. It survives by relying on economies of scale.
We **should put in some effort into the use of resources and make plans; otherwise, our descendants will have no energy left in the future. The recent issue of rare earths in China requires a more scientific approach; it’s not about setting up businesses just because we can make money in China. We should focus on access control and overall management – this is the scientific outlook on development. We plan to extract resources step by step, which will benefit future generations and will not see their wealth sold off at a cheap price.
It is best to establish standards from the outset of exploration and extraction. It’s not enough to simply extract half of the reserves. Today, scaled-up mining methods can extract over 90% of the coal reserves. Everyone should make an effort not to destroy these valuable coal resources.
Is it true that modern large-scale mining methods can extract over 90% of the coal reserves?
Coal companies are under great pressure, especially those that are state-owned and regulated, such as Shenhua. Therefore, \"even despite overcapacity, coal companies insisted on a 4% price increase in 2009, which was excessive.\" ”It’s the words of a layperson.
China has abundant coal resources, but they cannot be managed in a disorderly manner! These days, many are engaging in reckless mining, focusing only on extracting the best quality material. The United States also has abundant resources, but they extract very little of them. It’s time to leave something behind for future generations.
There will indeed be an oversupply. But every region needs to develop its local economy and achieve results, so new coal mining projects continue to be launched. **Macroeconomic control should be strengthened; we can’t dig up all of China’s coal at once – sustainable development is necessary.