Analysis: China's coal industry unlikely to keep the boom in H2
Thursday, August 05, 2021 10:31 PM

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BEIJING, Aug. 6, 2010 (Xinhua News Agency) -- China's coal industry is unlikely to continue the boom from the first half of this year to the second half under the pressure from the efforts in rein the real estate and the fulfillment of the energy efficiency and emission reduction targets.

Up until August 4, 11 listed coal companies on China's A-share stock market have reported profit growth for the first half of 2010, due to a continuous relatively high domestic coal price since the first quarter of 2010.

-- First half year results satisfactory

The combined net profits of these 11 companies amounted to 9.27 billion yuan in the first half of 2010, up 42 percent year on year.

The profit surge of coal companies was underpinned by an increasing power-coal price since the end of March. According to statistics from the National Development and Reform Commission, China produced 1.57 billion tonnes of coal in the first half, up 20.1 percent year on year. Meanwhile, the profits of the entire coal industry posted 80.9 percent growth to 122.5 billion yuan in the first five months of 2010.

However, two companies among the five who have published half-year reports incurred quarterly decreases, and the combined net profits of the five companies only increased 4.2 percent in the second quarter from the first quarter.

-- Growth in the second half to slow down

Analysts predicted that the growth of coal demand would slow down in the second half, leading to relatively abundant coal supply in China. This is because domestic coal demand did not surge greatly during the peak season in summer due to the greater contribution of hydropower generation and ample coal stocks at power plants. Thus the coal price fell back slightly during the peak season.

Lu Ping, an analyst with China Merchants Securities, said that the government control in the real-estate industry and macro-economy has taken preliminary effect, and economic growth is picking up from a slowdown trend. Meanwhile, the urge of emission reduction will further cut coal demand in the second half of 2010.

An analyst with Guotai Junan Securities believes that coal demand is unlikely to jump in the second half due to the production reduction in high-energy-consuming industries, ample coal stocks, low temperatures in South China, and a greater contribution of hydropower generation. The coke price has hit bottom in the short term and is not likely to rebound, because of high levels of steel inventory and the relatively low price of imported coke. (Edited by Li Xiaohui,



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