China's coal industry operation status and future prospects : Dr. Feng Yu

Dr. Feng Yu, Vice Chairman of China Coal Transportation and Distribution Association and President of China Coal Market.

The 2019 China Coal and Coal Chemical Industry Conference, which were co-sponsored by China Coal Transportation and Distribution Association, China Petroleum and Chemical Industry Association, China Nitrogen Fertilizer Industry Association and Zhengzhou Commodity Exchange, and organized by China Coal Market, Shanghai Steel Union E-Commerce Limited and Shandong Longzhong Information Technology Co., Ltd. was held in Shanghai International Convention Center from June 19 to 20, 2019.

Dr. Feng Yu, Vice Chairman of China Coal Transportation and Distribution Association and President of China Coal Market, gave a wonderful speech on the topic of China's coal industry operation status and future prospects on the conference. Due to the accelerated release of coal output in 2018, China's coal output contracted significantly in the first quarter of 2019. China's coal output only up 0.9% year on year in the first five months of this year because of the tough safety situation and increased safety inspections.

He said that the security situation was more severe this year, and the biggest reason for this was the accident happened in Yulin of Shaanxi Province. If there was no sudden extreme situation, China's coal prices would be lower this year. In addition, China is about to usher in the 70th anniversary of the founding of the country, there may be special rectification for the coal industry. In terms of imported coal, the total amount of imported coal is expected to be the same as last year. Imported coal reached 120 million tons in the first five months, up 5.6% year on year. And the total amount of imported coal may shrink in the second half of the year. In terms of coal consumption, coal consumption slowed down in the first quarter, and the growth rate of thermal coal consumption was particularly small. China's coal consumption was 1.31 billion tons in the first four months of 2019, up 1.3% year on year. Among them, the thermal coal consumption was 730 million tons, up 0.7% year on year. Coal consumption in key power plants decreased by 1.4% year on year in the first quarter of 2019. And the daily consumption of power plants in coastal areas was less than expected. The growth rate was significantly lower than the national level. In terms of coal transportation, thermal coal transportation volume increased by 2% year on year. The cumulative volume of railway thermal coal transportation was 1 billion tons in the first five months of 2019, up 19.53 million tons year on year. The port's key power plant inventory was 86.89 million tons, up 19.9% year on yea. And it was available for 25 days, 5 days more than that of last year. And coal inventory in the pit were about 27 million tons, up 5 million tons from a record low of 22 million tons in February of 2018. The coal inventory in the pit was relatively low.

Dr. Feng Yu pointed out that China's coal industry presented new problems and situations. Uncertainties affecting the balance of supply and demand in the coal market have increased, and coal de-capacity has also faced difficulties. The industry was unbalanced and insufficient. At the same time, the intensity of coal demand was not rising, but was decreasing. In addition, due to the influence of imported coal, the deficit of imported coal and international coal in the market was relatively large, and the time of customs clearance was constantly extended in front of huge interests. The demand for coal was significantly weaker than expected, the fluctuation of coal consumption increased in the peak and low season, and coal-fired power generation fell sharply. Imported coal would maintain a relatively loose level. He expected coal prices in seaborne coal market would be relatively stable in June, maintaining around 590 yuan /mt. After China Shenhua lowered the price last month, there was a sharp drop, but the coal consumption was stable now. Coal price center of gravity will move down in July.

Finally, Dr. Feng Yu appealed to insist that the supply-side reforms are unwavering, accurately grasping the market situation, attaching great importance to macroeconomic changes, and implementing national policy measures to stabilize the market. Coal enterprises must adjust the structure, further transform and upgrade, accelerate mergers and acquisitions and industrial integration, rely on science and technology to achieve development, and promote enterprises' business model innovation.