• Interpretation of China's Coal Decapacity Policy and Market Impact Study

  • Number of pages: About 40

    Number of tables/charts: About 60

    Date of completion:May, 2016

TOTAL: US$ 2000

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With a view to serious coal overcapacity and difficult operation of coal miners, the State Council of China issued the "Opinions on Resolving Coal Industry Overcapacity and Helping Enterprises through Difficult Times" in this early February, manifesting is firm determination to reform domestic coal industry and realize industry upgrading. According to the Opinions, China will spend 3~5 years to realize capacity withdrawal of 1,000Mt/a (500Mt/a through direct mine closure and 500Mt/a through mine regrouping).
Be aware of the significance of the Opinions, Fenwei, at the first time, organized experts and analysts to interpret this document and exchange views on its impact on development trend of China coal industry. All of our exclusive conclusions and industry insight are incorporated in this special report.


Chapter 1 Interpretation of the Opinions       

1. Analysis of the General Requirements       

    1.1  Timely, targeted and effective 

    1.2  Facilitate voluntary withdrawal of zombie SOEs with compensation       

    1.3  Intensify administration and motivate local governments       

    1.4  Further increase in the weight of SOEs    

2. Analysis of the Major Tasks

    2.1  No approval for new mines

    2.2  Mines withdrawal in accordance with law       

    2.3  Strict implementation of overproduction control     

           2.3.1  Actual capacity far exceeds approved capacity    

           2.3.2  Overproduction is commonplace among mines newly commenced     

           2.3.3  Capacity reassessment to greatly increase production cost        

    2.4 Company regrouping and coal-electricity integration      

3. Evaluation of Policy Measures    

4. Evaluation of Organizational Measures     


Chapter 2 Impact of the Opinions on China Coal Output        

1. Small Mines Blacklisted for Elimination      

    1.1  Capacity    

    1.2  Market impact 

2. Old Mines Eligible to Stay but Mining Life Exceeds 50 Years and Loss-making 

    2.1  Capacity    

    2.2  Production

    2.3  Market impact 

3. Inferior Mines     

    3.1  Definition  

    3.2  Capacity    

    3.3  Capacity utilization   

    3.4  Market impact 

4. Potential Capacity of Under-construction Mines        

    4.1  Total capacity   

    4.2  Capacity of expanding mines    

    4.3  Capacity of newly-built mines  

    4.4  Possible capacity withdrawal   

5. Market Impact from Capacity Withdrawal

6. Impact from Banning Overproduction and Shortening Working Hours      

    6.1  Overproduction in Shanxi

    6.2  Capacity forecast in case of 330 work days      

    6.3  Capacity forecast in case of 276 work days      

7. Outlook for China Coal Output in Next Three Years   

    7.1  Year for 2016 – under dual pressure from bearish market and policy intervention

    7.2  Year 2017 – oversupply returns        

    7.3  Years ahead – healthy development         


Chapter 3 Impact of the Opinions on Coal Production Cost and Competitiveness         

1. Impact of KSOEs Expansion

    1.1  Coal industry nationalization trends up   

    1.2  Cost comparison among enterprises of varied ownership       

2. Impact of Shortened Work Days and Trimmed Output      

    2.1  Shortened work days to increase period cost  

    2.2  Production halt duration and frequency impact work safety and production cost  

    2.3  Personnel productivity impacts production cost      

    2.4  Financial and other expenses impacts production cost   

3. Impact of Restricting Low-cost Enterprises but Subsidizing Zombie Enterprises      

    3.1  Low-cost enterprises to see capacity/output reduced and market share squeezed       

    3.2  Impact of subsidy to production cost        

4. Forecast of Effects of the Opinions     

    4.1  Implementation of the Opinions and impact on production cost in 2016

    4.2  Implementation of the Opinions and impact on production cost in 2017

    4.3  China coal industry to regain competitiveness


Chapter 4 Impact of the Opinions on China Coal Prices

1. China Coal Supply-demand Forecast in 2016      

    1.1  Thermal coal demand       

    1.2  Coking coal demand 

2. Changes on China Coal Stock since 2014   

    2.1  Thermal coal stock   

    2.2  Coking coal stock      

3. Impact of the Opinions on China Coal Supply-demand Balance in 2016     

    3.1  Thermal coal supply-demand balance      

    3.2 C oking coal supply-demand balance

4. China Coal Price Forecast in 2016       

    4.1  Thermal coal prices  

    4.2  Coking coal prices     


Chapter 5 Impact of the Opinions on China Coal Import and Export     

1. Cost Comparison between Chinese and Imported Coals in 2015      

    1.1  Thermal coal     

    1.2  Coking coal        

2. Short-lived Recovery of Coal Imports in 2016     

    2.1  Thermal coal     

    2.2  Coking coal