context: Coal industry saw an overall good year in 2018, as a result of deepening of supply-side structural reform. In the first eight months, major coal producers' profitability saw 16.6 percent growth. However, it is questionable whether the situation will continue with central efforts targeting curbing coal consumption and the industry itself facing problems such as high debt ratios, low railway transport ratio and imperfect geographical layout.
China's coal consumption will continue to grow in 2019 as a result of economic growth, however development of renewable energy and economic upgrade will slow down coal consumption growth, notes Zhang Hong 张宏 China Coal Industry Association deputy secretary general. In 2019, overall coal market situation will be more stabilised and supply will be more sufficient, adds Zhang. The projection is made based on
- growth of large-scale coal mines, especially mega mines with annual capacity over 10 million tonnes
- coal imports, which became a key source for coastal regions' power plants, were stable and continued to grow
- coal transport capabilities will be strengthened, especially with the operation of the coal transport line Inner Mongolia-Jiangxi Railway being put into operation
However, he also warned over potential seasonal volatilities caused by unpredictable climate and weather conditions as well as reasons related to unstable transport, highlighting
- electricity supply-demand structural changes caused by expanded gaps between peak and low demand
- the increasing ratio of renewable power means that coal-fired power's function as baseload power is becoming more significant therefore it is required to be more flexible and responsive to accommodate climate and weather conditions that impact renewable energy
- imperfect layout of transport and demand markets
- trading activities are increasingly active; as they influence market expectations, this can exaggerate seasonal supply shortages