Coal Industry Structure Acceleration

From the analysis of the trend of the industrial economy, the China Coal Industry Association predicts that coal demand will continue to increase slightly in the third quarter and the second half of the year. The production capacity will continue to be released and imports will increase. The market will continue to show a trend of loose supply and demand and a structural overcapacity. The task of inventory is heavy and business operations will face greater difficulties.

When the market is sluggish, when is the bottom?

Since the “cliff-breaking” decline in domestic coal prices in May 2012, the coal market has continued to slump, and industry profits have continued to decline. When will this round of declines reach the “bottom level”?

According to Jiang Zhimin, vice chairman of China Coal Association, historical experience shows that compared with the cyclical changes in the macro economy, the cyclical changes in the coal industry are lagging behind. At present, the macro-economy has started to stabilize, but the development of the downstream industries of the coal industry is still faced with great difficulties, so the difficult situation of the coal industry will continue.

In the longer term, coal will still account for more than 50% of China's primary energy structure. The coal industry still has a lot of room for development.

The growth in coal consumption cannot be doubted, but the growth rate will certainly decline. Jiang Zhimin said that China's economic growth rate will fall, and coal demand growth will also slow down.

How much space is there for the coal companies to reduce costs?

Since last year, coal companies have adopted various measures to reduce costs and increase efficiency, which can be more than a year later. Coal prices have yet to see signs of stabilization and recovery. How much room is there for coal companies to reduce costs?

Zhang Hong, Director of Policy Research Department of China Coal Industry Association, said that under the pressure of the market, coal companies have generally reduced their coal production costs by strengthening risk control, strict cost control, optimizing production layout, and optimizing the structure of the industry. However, in addition to production costs, the cost of coal companies also includes operating costs, tax costs, since the beginning of the market's trough, the latter two costs have not only not decreased, but have increased.

In general, the cost of coal companies is rising. As the depth of coal mining increases and the level of mechanization continues to increase, the costs of coal mining, such as mining costs and safety inputs, will continue to increase.

Zhang Hong suggested that from the perspective of supporting the development of the coal industry, relevant departments should take effective measures to reduce the operating costs and tax costs of coal companies as soon as possible.

The coal industry restructuring has taken a new step Although the market is sluggish and the entire industry is in trouble, the restructuring of the coal industry still makes progress.

The coal production structure is continuously optimized. More than 850 large-scale modernized coal mines with an annual output of 1.2 million tons or more have been built in the country. The output accounts for about 65% of the country's total. Among them, 47 coal mines with an annual output of 10 million tons are built, with a production capacity of nearly 600 million tons and an annual output of 300,000 tons or less. The output of small coal mines fell below 17%.

The pace of mergers and reorganizations in the coal industry has accelerated. Since last year, Henan, Inner Mongolia, Guizhou, Sichuan, Jilin, Hunan, and Fujian provinces have again introduced policies to promote mergers and acquisitions.

The degree of concentration of the coal industry has increased. In the first half of the year, the output of the top four coal enterprises accounted for 26.1% of the country's total coal output, which was a 3.5% increase year-on-year; the output of the top eight coal companies accounted for 38.5% of the country's total coal output, which was an increase of 4.9 percentage points year-on-year.

Coal-based enterprises have a rapid development of diversified industries. The integration of coal and electricity and the development of coal-coke integration have been accelerating. The new coal chemical industry has gradually emerged, and various industries such as trade, finance and logistics have begun to take shape. Up to now, the installed capacity of coal enterprises has reached 120 million kilowatts.