In the first half of the current year, China’s large and medium-sized coal enterprises registered a gross profit of RMB 20.05 billion ($3.23 billion), equivalent to only 10.5 percent of the gross profit figure recorded in the same period of 2012, while 70 percent of these coal producers recorded losses, with their losses amounting to RMB 48.41 billion ($7.8 billion), as announced by China’s National Development and Reform Commission (NDRC).
Since 2012, China’s domestic coal prices have continued to decline and the imbalance of between supply and demand has increased. As of July 30, the price of thermal coal of 5,500 kilocalories/kg was RMB 415/mt ($66.9/mt) at Qinghuangdao.
According to Guo Zhonghua, deputy director of the policy study department of the China National Coal Association, coal consumption from downstream industries in China, including the power generation, steel and building material industries, is expected to decline in 2015 amid overall oversupply. He expects that China’s coal producers will experience a more difficult situation in the second half of this year.