Robust outlook for H2 China's coal market

The first half-year saw a robust coal market in China, with increasing coal output and surging coal prices, and the coal market tended to be more market-oriented.

China produced 202.4 million tons of coal in June, up 9.8 percent over the same period of last year; accumulative 1.08 billion tons of coal for the first half-year, up 11.4 percent year-on-year.

According to the SAWS, China closed 8984 small mines by the end of June, accumulative coal mine accidents for the half year decreased 19.1 percent year-on-year.

Statistics showed that the output growth rates of the four major coal-consuming industries, power, coke, raw steel and cement sectors, were 18.4, 21.7, 20.0 and 16.1 percent, respectively, much faster than the 12.5-percent growth rate of raw coal production during Jan-May. It is estimated that the coal demand from the coal-consuming industries will continue to be strong.

Meanwhile, expansion of coal production capacity will be effectively curbed. It is known that a total of 358 million yuan has been invested in the coal industry, increasing 13.5 percent year-on-year, lower than last year's growth rate, and the downward trend will continue in the second half-year.

The Chinese government will continuously curb coal exports by tariff adjustment, maintaining its status of net coal importer. The coke export tariff has been increased from 5 percent to 15 percent and coal import tariff will be cancelled. China imported 27.07 million tons of coal during the first half-year, up 47.6 percent year-on-year, but with a sharp decline in coal export.

It is estimated that coal prices will continue the upward momentum in the coming half-year.