The National Development andReform Commission of China(NDRC) released on August 27a report on the first-half operation antthe second-half expectation of the coalindustry. The coal industry is predictedto have a consecutive balance of sup-ply and demand this year with a lessstrained supply in the second halt.
Fast growing production, transport,and demand
This year, due to faster growinginvestment and demand coupled withwider increase in transportation capac-ity, the coal turnout is rebounding.
The fixed-assets investment in theindustry saw rapid increase in the firsthalf. In particular, the investment inreal estate, a strong momentum to theincreasing coal demand, jumped 28.5%,6.7 percentage points higher than thefull-year of 2003. In this regard, in thefirst half the domestic coal consumptionis estimated at roughly 1.263 billiontons, leaping about 12.2%, more than 2percentage points higher than last year.
Rapid rising production cost
According to the National Bureauof Statistics of China, in the first fivemonths of this year China's coal industryachieved a profit of RMB 30.86 billionyuan, increasing 43.1% year on year.
Despite the profit increase, the wholeindustry began to incur a negative influ-ence of the excessively rapid growth inproduction cost, which has pulled downthe profit. In May, coal companies un-der the aegis of the central governmentsuffered a year-on-year profit decline of5.2%.
In the second half, China's coal de-mand will continue to go up rapidly at aslower pace. The fairly rapid growth incoal supply is bringing the pressure ofoversupply. In recent years, the coal pro-duction capacity has kept a rapid growth.From 2002 to 2006, the new capacityof about 666 million tons had been putinto operation. In 2007 and 2008, morecapacity will be brought into operation,which will lead to a faster increase incapacity than in demand.