China Coal Monthly Issue 126 - 168336110913052132

IHS energy
China Coal Monthly

The definitive monthly publication on the Chinese coal industry
July 2014 | Issue 126
mccloskeycoal.com
Domestic Chinese prices set

to bottom out in August
The ChINeSe COAL market is expected to
rebound around late August, with prices
stabilising on the back of improved demand
and lower hydro output, according to
market analysts.
However, before that, sentiment suggest
the market will remain weak following
continued price cuts by producers. For
example, Shenhua reducing prices by a
combined RMB55/t ($8.94/t) from June
26-July 28.
Shenhua, the leader who initiated the steep
price cuts, is currently selling its 5,500kc
NAR material at MB475/t ($77.24/t) FOB,
down 10.4% from the RMB530/t ($86.18/t)
FOB it was selling at before June 26.
This price equates to just $66/t, exclusive
of VAT. Its 5,800kc NAR coal was priced
RMB515/t ($83.7/t), while its 5,000kc NAR
product now sells at RMB415/t ($67.5/t),
after an RMB10/t ($1.6/t) reduction was
announced on July 28.
Shenhua said in early July that it had
scrapped its earlier indexation scheme set at
the beginning of the year and had adopted
a lowest-pricing strategy, which essentially
means the company would not tolerate other
miners selling at prices lower than Shenhua.
At the same time, Shenhua Group said on
July 28 that it would cut output by 50mt,
and sales by 60mt this year, which will be
equivalent to roughly 10% of the companys
output at 498mt and sales at 663mt last year.
IhS McCloskey/xinhua Infolink Chinese markers

Steam Coal
QhD FOB Marker ($/t)
It is understood that the proposed cuts,

probably as a response to government calls
for output caps, will mainly come from its
under-performing coking coal mines in
Inner Mongolia and low quality steam coal
mines with long railing distances, which will
help reduce operating losses.
Shenhua officials commented
simultaneously that they expect that the
moves taken by the company will lead to
more operation stoppages and a new wave of
consolidation in the domestic coal market.
Analysts predict that the company may have
worked out plans for taking over smaller
miners that will be forced to halt business due
to poor economic condition for coal sales.
It is also understood that other major
producers are mostly unable to make
similar production cuts, as this will mean
high amounts of compensation because
more workers are hired in the more costly
underground operations. However, the
earlier price cuts have already led to large
numbers of coal companies falling into the
red over the past few months.
Most of Chinas major producers are
thought to have had to follow suit and lower
prices accordingly, over the recent months,
in a bid to maintain their market share.
The Shenhua pricing strategy has helped
to cut coal stocks at its Huanghua port to
1.63mt by July 28, compared with recent
high of 2.79mt on July 13. Insiders expect
20-Jun
27-Jun
4-Jul
5,000kc NAR
72.40
71.59
71.23
11-Jul
70.08
or 4,900kc NAR
70.95
70.16
69.80
68.68
5,500kc NAR
83.71
82.95
81.34
80.50
5,800kc NAR
89.88
89.26
88.51
87.43
or 6,000kc NAR
92.98
92.34
91.56
90.45
Note: FOB prices inclusive of domestic taxes
South China CFR marker ($/t)

20-Jun
27-Jun
4-Jul
11-Jul
4,900kc NAR
61.95
61.20
60.20
59.45
5,500kc NAR
70.40
69.50
68.60
67.45
6,000kc NAR
78.65
77.80
76.20
75.05
Note: CFR prices exclusive of Chinese taxes

Source: IHS Energy, Xinhua Infolink
Coking coal price in Shanxi

Gujiao
23-Jun
30-Jun
7-Jul
14-Jul
905
875
875
875
Note: 1. FOR prices inclusive of domestic taxes

2. ash <8%, volatiles 16~22%, sulphur 1.3%
Coking coal price in hebei

Tangshan
23-Jun
30-Jun
7-Jul
14-Jul
930
920
920
920
Note: 1. CIF prices inclusive of domestic taxes

2. ash <10%, volatiles 23~25%, sulphur<1%
Coke price in hebei

Tangshan
24-Jun
1-Jul
8-Jul
15-Jul
1,030
1,030
1,030
1,030
Note: ash 13%, volatiles 1.2%, sulphur0.75%
Coke price in Shanxi (RMB/t)

Jiexiu
24-Jun
1-Jul
8-Jul
15-Jul
830
830
830
830
Note: ash 13, sulphur0.75, volatiles1.2
Coal imports (000t)

May. 2014
May. 2013
% Change
yTD 2014
Steam coal
9,198
9,406
-2%
51,103
44,326
15%
coking coal
5,882
6,495
-9%
25,321
30,629
-17%
anthracite
2,471
3,888
-36%
14,622
17,517
-17%
brown coal
4,719
4,365
8%
30,672
25,766
19%
other coal
1,743
3,412
-49%
13,411
17,999
-25%
24,012
27,566
-13%
135,129
136,237
-1%
Total
yTD 2013 % Change
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mccloskeycoal.com
2014 IHS July 2014
China Coal Monthly | 1
Contents
LeADS
Domestic Chinese prices

set to bottom out in August
Chinese Import settlements
become more difficult
China to impose coal production cuts
Chinas coal resource tax
reform to be introduced this year
Chinas GDP growth edges up
PMI reading climbs further
Chinas railway construction to accelerate in H2
Chinas power demand increases in June
Chinas hydro power output strong in June
Coal miners see financial
status worsen in China
CEC adjusts down power demand forecast
Datang withdraws from coal-to-chemicals
China promotes low emission units
1
4
4
5
5
6
6
6
7
7
7
8
8
MACROeCONOMIC
China to accelerate infrastructure building

China pushes mixed ownership
9
9
GOveRNMeNT
China tightens control over coal conversion

Xinjiang plans giant coalscheme
Xinjiang boosts railing capacity
Chinese steam coal, iron ore
swaps to debut in August
9
10
10
Offshore wind farm growth

gains speed in China
Chinas wind capacity climbs23% in H1
IMpORTS
13
14
STeeL INDuSTRy
Chinese steel prices remainat low levels

Chinese steel mills profitability worsening
14
15
pRODuCTION & STOCkS
Chinas H1 coal productionfalls

Inventories at Chinas portsstart to fall
15
16
21
21
22
22
23
23
23
23
23
Imports by country (000t)

Imports by type (000t)
Imports by region (000t)
Imports by region and type (000t)
Imports by company (000t)
Imports by quality (000t)
Imports by region (000t) - May 2014
Coal imports (000t) - May 2014
Imports by country (000t) - May 2014
expORTS
TRANSpORTATION
China Power Investment tobuild railway

16
Chinas rail and port handling improves in June 17
OTheRS
Yitai to build coal liquefactionin Xinjiang

Chinas gas demand increases
Third round of Chinese shale
gas auction planned
Mongolia looks to export gasto China
China faces LNG oversupply
Chinese energy structurechanging
17
17
18
18
18
18
COMpANIeS
Shenhua wins green light for Oz mine

Shenhua drills shale gas wells
18
19
11
24
24
24
25
25
25
25
25
25
26
Exports by country (000t)

Exports by type (000t)
Exports by company (000t)
Chinas coal exports (000t)
Shanxi exports (000t)
Total exports (000t)
Shenhua exports (000t)
Minmetal exports (000t)
Total anthracite exports (000t)
Total coking exports (000t)
COke
26
26
26
26
27
Coke exports by country (000t)

Coke imports (000t)
Total steam exports (000t)
Coke production (000t)
Coke production by region (000t)
pORTS
MARkeTS
Chinese met prices edgedown further

Chinas coal exports pick up further
SOEs dominate Chinas topcoal importers
11
11
12
pOweR INDuSTRy
Power output climbs in June

12
Hydro power capacity jumpsin China
12
Chinas State Grid to accelerarate UHV building 13
Chinas power industry reforms to speed up 13
Raw coal output (000t)

Stocks of port (mt)
Stocks of port (mt) - July 2014
Shipments of major ports (mt)
Deliveries of state-owned railways (mt)
Domestic seaborne freights (RMB/t)
Stocks by producer (mt)
Coal consumption of major
power plants (mt/day)
Coal stocks at major power plants (mt)
International seaborne freights ($/t)
20
20
20
20
20
20
20
STeeL
Crude steel production by region (000t)
28
IRON
29
Pig iron production by region (000t)

pOweR
The national power generation (100GWh)
29
20
20
20
IHS China Coal Monthly

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2 | China Coal Monthly
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Leads
CIF Guangzhou, basis 5,500kc NAR (RMB/t)
FOB prices at Qinhuangdao, basis 5,500kc NAR ($/t)

110
105
100
95
90
85
80
75
70
Jul 18
Jun 6
Jun 27
May 16
Apr 4
Apr 25
Feb 21
5,500
Mar 14
Jan 10
5,000
Jan 31
Dec 20
Nov 8
Nov 29
Oct 18
Sep 6
Sep 27
Aug 16
Jul 5
65
Jul 26
that the Chinese coal market sentiment may improve next month,
although near-term weakness may continue sometime, with further
cut possible at Shenhua which can withstand additional cuts of
at least RMB50-60/t ($8.1-9.8/t) while still earning profits for its
5,500kc NAR quality.
The projected recovery is mostly due to expected rising demand
from a steady recovery in macro economic performance.
The countrys official Purchasing Managers Index (PMI) figure
for the manufacturing sectors increased to 51% in June, up another
0.2 percentage point from May, and marking the fourth month of
growth in a row.
The reading for July may edge up further, with the HSBC flash PMI
hitting 52 in the month, up from Junes final reading of 50.7. It was
the highest level since January 2013, and stood above the 50-point
boom-or-bust line for the second consecutive month.
Hydro production is predicted to edge down during August, while
power consumption will hit its seasonal high in the month. In August
2013, hydro power output was 84.17bn kWh, down from 85.4bn kWh
in July, and slumping 10.1% year-on-year. The figure dropped further to
78.3bn kWh in September and 69.4bn kWh in October.
However, production is predicted to come down from August,
as the state-owned groups are set to carry out production cuts
following calls for a 10% reduction from the China National Coal
Association (CNCA). Its also believed that the government is to
5,800
Source: CCM
FOB prices at Qinhuangdao ($/t)

Date
Basis 5,800kc NAR
Basis 5,500kc NAR
25-Jul
84.64
78.09
Basis 5,000kc NAR

67.84
18-Jul
85.69
79.21
69.03
11-Jul
87.43
80.5
70.08
04-Jul
88.51
81.34
71.23
Source: CCM
Qinhuangdao stockpiles (mt)
740
8.5
8.0
710
7.5
680
7.0
6.5
650
6.0
620
5.5
5.0
590
4.5
4.0
Jul 2
Jul 17
Jul 28
Aug 12
Aug 25
Sep 9
Sep 23
Oct 8
Oct 24
Nov 15
Dec 4
Dec 20
Jan 7
Jan 21
Feb 10
Feb 25
Mar 17
Apr 1
Apr 17
Apr 30
May 16
Jun 3
Jun 24
Jul 12
Jul 28
Jul 1
Jul 22
Aug 9
Aug 26
Sep 9
Sep 24
Oct 8
Oct 24
Nov 7
Nov 22
Dec 12
Dec 30
Jan 20
Feb 8
Feb 25
Mar 17
Apr 9
Apr 28
May 14
Jun 3
Jun 23
Jul 10
Jul 28
560
Source:CCM
Source: CCM
FOR prices at Shanxi ($/t)

Date
Basis 5,800kc NAR
Basis 5,500kc NAR
28-Jul
61.69
58.44
52.76
70
21-Jul
61.79
59.35
52.85
60
14-Jul
61.79
59.35
52.85
07-Jul
61.59
58.35
53.48
80
50
Basis 5,000kc NAR
Source: CCM
40
Shenhuas term coal prices
30
QHD-Shanghai in 40,000-50,000t vessels

QHD-Guangzhou in 50,000-60,000t vessels
QHD-Ningbo in 15,000-20,000t vessels
Source: CCM
mccloskeycoal.com
Jul 8
Jul 28
Jun 23
Jun 3
Apr 25
May 14
Apr 4
Feb 24
Mar 14
Jan 30
Jan 10
Dec 10
Nov 11
Oct 8
Aug 9
Sep 11
Date
Jul 1
20
5,500kc NAR
Change
28-Jul
RMB475/t ($77.24/t)
RMB10/t ($1.63/t)
18-Jul
RMB485/t ($78.86/t)
RMB5/t ($0.81/t)
14-Jul
RMB490/t ($79.67/t)
RMB5/t ($0.81/t)
10-Jul
RMB495/t ($80.49/t)
RMB15/t ($2.44/t)
26-Jun
RMB510/t ($82.93/t)
RMB20/t ($3.25/t)
Source: CCM
2014 IHS July 2014 China Coal Monthly | 3
Leads
Chinas coal imports (mt)
36
34
32
Chinese Import settlements

become more difficult
30
The sharp price falls in the domestic market since June have
24
Imports expand in June

The countrys total import figure climbed in June due to more lignite
arrivals, after the import ban on low quality coals became clear and
proved to be insignificant in May.
Total arrivals came to 25.05mt in June, up 1.04mt, or 4.3%, from
24.01mt the previous month, and also rising from 22.31mt in June
last year, according to the preliminary customs statistics.
The increased tonnage mainly came from lignite, which is also
used for power generation. Lignite arrivals climbed to 5.89mt in the
month, up 1.18mt, or more than one quarter, from 4.71mt in May,
and also soaring 36.3% from 4.32mt imported in June last year.
Coking coal imports dipped further to 5.72mt, versus 5.88mt, but
still up nearly 1mt from 4.7mt in June 2013. Arrivals from Australia
decreased to 2.52mt from 2.96mt in May, but the tonnage from
Mongolia rose to 1.87mt from 1.58mt.
4 | China Coal Monthly July 2014 2014 IHS
Jun 14
May 14
Apr 14
Mar 14
Feb 14
Jan 14
Dec 13
Nov 13
Oct 13
Sep 13
Aug 13
22
Jul 13
26
Source: CCM
South China CFR Marker for imported materials ($/t)

$95.00
$90.00
$85.00
$80.00
$75.00
$70.00
$65.00
$60.00
6,000kc NAR
5,500kc NAR
Jul 4
Jun 6
May 9
Apr 11
Mar 14
Feb 14
Jan 17
Dec 20
Nov 22
Oct 25
Sep 27
Aug 2
Aug 30
$55.00
Jul 5
dramatically dampened new deals into China, with traders having

mostly stopped new business while dumping much of thier
previously booked cargoes continues.
As of June 29, 5,500kc NAR material from Shenhua was traded at
RMB475/t ($77.24/t) FOB, which is equivalent to $66.01/t exclusive
of VAT. In the same time, some spot deals were heard being done at
RMB471/t ($76.46/t), equating to $65.35/t excluding tax.
Despite the already low levels, market participants have remained
nervous that domestic mining giants may cut prices again before late
August, as few players seem to be bullish about demand before that time.
Imported cargoes were being traded at around $65.00/t CFR, basis
5,500kc NAR, around the end of July, down from $69.50/t at the end
of June and $72.75/t at May close, according to the IHS Energy/Xinhua
Infolink South China CFR marker.
Meanwhile, cargoes booked earlier by traders, many believed to
have been acquired for financing purposes, were being dumped at
even softer prices as low $63/t CFR, basis 5,500kc NAR, according to
market sources.
This has left imports with little or no competitive edge currently,
as Chinese users would traditionally ink import deals only when
prices are at least $1.5/t below the domestic FOB levels.
This is despite increasing numbers of players suggesting that the
CFR price fall may slow down in a few weeks time as suppliers have
been incurring tremendous losses and would rather sell cargoes to
other markets like India.
However, the Chinese import market still has a chance to rebound in
later months, market players suggest. They forecast that domestic price
levels may rebound in September, with the trend predicted to last into
the winter months, which may lead to increases in deals settlements.
But before that, import tonnages are expected to be largely stable
at around 24-26mt/month.
28
Jun 13
introduce more measures to stabilise the domestic coal sector.

Its also anticipated that Chinas domestic prices may rebound
in September, when the stockpiling for winter heating begins and
before the routine maintenance on the key Daqin railway line kicks
off in October.
4,900kc NAR
Source: CCM
Steam coal imports, which also include sub-bituminous coals, came

to 10.94mt in June, which was flat to May and up from 9.75mt in June
last year. Tonnages from Australia expanded to 5.23mt from 4.81mt in
May, and receivals from Indonesia rose to 3.68mt from 3.07mt.
Purchases of anthracite remained stable at 2.5mt, similar to 2.47mt
in May, but falling sharply from 3.58mt in the same month of last year.
This saw the tonnage from North Korea at 1.4mt, versus 1.31mt in
May and 1.6mt in June last year, while imports from Vietnam were
0.63mt, up from 0.46mt in May, but slumping 40.1% from June last year.
Year-to-date imports are at 159.87mt, up 0.9% from 158.6mt in the
first half of last year. This includes 75.64mt of steam coal, up from
72.07mt in the same period of last year, and 30.96mt of coking coal,
slipping 12.3% year-on-year from 35.33mt.
Year-to-date anthracite imports stood at 17.03mt, dipping 19.2%
year-on-year from 21.1mt, and lignite arrivals came to 36.21mt,
jumping 34.3%% from 30.09mt imported in the first half of 2013.
China to impose coal

production cuts
Chinese authorities are preparing a policy for coal production
cuts, which could order producers to cut production by at least 10%
this year, from last years level of 3.7bn tonnes.
mccloskeycoal.com
Leads
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Chinas GDP growth climbed marginally in Q2 this year, after

previously launched incentive measures began to impact.
Q2 growth was 7.5%, accelerating from 7.4% in Q1, according to
the National Bureau of Statistics (NBS). For the whole of H1, the rate
stood at 7.4%.
The countrys actual GDP figure for Q2 was RMB14.08 trillion
($2.29bn), compared with RMB12.82 trillion ($2.08 trillion) in Q1.
This has seen production of the industrial and construction
sectors rise to RMB6.63 trillion ($1.08bn), up 13.12% from RMB5.76
trillion ($936.66bn) in the previous quarter.
The extractive, agriculture and forestry sectors saw output expand
to RMB1.2 trillion ($195.12bn) from RMB777.6bn ($126.44bn) in
Q1, but the figure for the services sector dipped to RMB6.25 trillion
($1.02 trillion), from RMB6.29 trillion ($1.02 trillion) in Q1.
Overall industrial growth was 9.2% y-o-y in June, up from 8.8% in
May and 8.7% in April.
Crude steel production increased 4.5% y-o-y, versus 2.6% in the
previous month. However, cement output dropped to 231.96mt in
June, down from 234.27mt in the previous month, and the y-o-y
growth rate fell from 3.2% to 0.8%.
Output of sheet glass dropped to 70.33m boxes, down 1.55% from
May and down 1.9% from June last year. This was in contrast to a
year-on-year growth of 6.4% in the previous month.
Meanwhile, automobile production slid to 2.03m units in June,
down from 2.13m units in May, and the y-o-y growth slipped to 11.2%
from 12.2% in the previous month.
Mainstream economists remain bearish about the midterm outlook, as the current growth is heavily dependent on
infrastructural related investment, at a time when consumption and
export trade has been on a downtrend.
The GDP growth may stagger at around 7.3-7.5% in the remaining
two quarters of this year, which means the earlier 7.5% target set for
the whole year may be missed, the economists said.
Chinas industrial growth

11.0
10.5
10.0
9.5
Jun 14
May 14
Apr 14
Mar 14
Jan-Feb 14
Dec 13
Nov 13
Oct 13
8.5
Sep 13
9.0
Aug 13
China is to extend its ad valorem resource tax reforms to the coal

sector later this year, after carrying out a similar policy in the oil and
gas sectors in 2011.
The plan was confirmed by Jia Kang, researcher of the Ministry of
Finance, at an environmental protection forum on July 19.
Different sources anticipated that the rate might be set at around
2-5% based on mine prices, which will equates to an additional
RMB7.5-18.75/t ($1.22-3.05/t) of extra costs. This is based on the
average mine price of RMB375/t ($60.98/t) in Shanxi this year,
which fell from RMB465/t ($75.61/t) last year, according to local
governments survey.
The new rate is much higher than Chinas current resource tax on
coal, which is based on production tonnages, and stands at RMB0.35/t ($0.05-$0.8/t) for thermal and other types of coal and RMB8-20/t
($1.3-$3.3/t) for coking coal.
The country started to collect the ad valorem resource tax on crude
oil and natural gas nationwide in 2011. Prior to that, the policy was
piloted in Xinjiang in 2010.
The reform has been delayed many times as the previous
government believed that the higher tax may add inflation pressure
at a time that commodity prices had been on a rise due, in part, to the
governments stimulus measures.
Chinas CPI growth has held at low levels in recent years, however,
as the GDP growth slowed while tighter liquidity control was
imposed to reduce risks in the financial markets.
Chinas GDP growth edges up
Jul 13
Chinas coal resource tax reform

to be introduced this year
Meanwhile, local governments have been reducing various

surcharges imposed previously on coal, which is thought to be paving
the way for the launch of the new resource tax. It is estimated that
in Shanxi, tax and surcharges totaled approximately RMB170/t
($27.64/t), more than 40% of miners production costs.
Jun 13
China National Coal Association (CNCA) chairman Wang

Xianzheng told a coal event in Dalian on July 24 that related
government agencies have been studying the issue and are expected
to implement the policy in the near future.
Shenhua was the first to respond to the policy, vowing to cut its
output by 50mt and sales by 60mt this year, which accounted for 10%
of its output of 498mt and sales at 663mt last year.
Earlier at a seminar held on July 12, 14 major producers from Shanxi,
Inner Mongolia and Shaanxi expressed support for the policy.
In addition to the production reduction, the Chinese government
is to begin its low quality import ban, and it is also working to lift the
10% coal export tariff so that tax levels will be the same for imports
and exports, said the CNCA chief, although no schedule was given.
Meanwhile, mines with depleting resources and higher production
costs will be left to go bankrupt, although the government is to
provide financial assistance in such cases.
Through these measures, the CNCA hopes Chinas domestic prices
will reach levels of around RMB550-660/t ($89.28-107.14/t) FOB,
basis 5,500kc NAR, which will be in sharp contrast to those available
currently - RMB475/t FOB, basis 5,500kc NAR (or, $77.24/t).
These policies may help producers finally realise profits, after
months of severe difficulties for most Chinese miners. It is
understood that more than 70% of Chinas coal groups are operating
in the red at present, with at least 50% of them facing difficulties in
salary payments.
Profits from the coal industry as a whole totaled RMB61.31bn
($9.97bn) in the first half of this year, falling 43.9% from the same
period of last year, according to the National Bureau of Statistics.
Source: CCM
Leads
PMI reading climbs further

Chinas monthly manufacturing activities have expanded once
again, with the official Purchasing Managers Index (PMI) figure for
the manufacturing sectors increasing to 51% in June, up another
0.2 percentage point from May, marking the fourth month of
growth in a row.
All the major sub-indices have also shown improvement over
the month, with the production index hitting 53%, growing 0.2
percentage point month-on-month. The new orders index was 52.8%,
climbing 0.5 percentage point, while the new export orders index
was up by one percentage point to 50.3%.
This suggests that the recent weakness in Chinas macro economy
has started to bottom out, following incentive measures introduced
over previous month. The recovery to expected to continue in later
months, according to analysts.
Chinas PMI reading
51.6
51.4
Chinas power demand

increases in June
Chinas power demand increased in June, on the back of higher
51.2
51.0
50.8
50.6
50.4
Jun 14
May 14
Apr 14
Mar 14
Feb 14
Jan 14
Dec 13
Nov 13
Oct 13
Sep 13
Aug 13
Jul 13
Jun 13
50.2
50.0
total costs are estimated at RMB327.3bn ($53.22bn). More than half

of these lines are located in western regions, according to analysts.
On June 30 alone, construction began on four passenger lines,
and on July 3 the railway from Xinjiangs Hami to Ejina in Inner
Mongolia began construction. Work on the remaining nine railways
will begin soon.
Chinas railway construction normally speeds up in H2, and this
year may see a surge as investment in H1 was low, analysts said.
To support these projects, the China Railway Corporation is
planning to issue RMB60bn ($9.72bn) of bonds in H2, having raised
RMB90bn ($14.6bn) from April 10 to July 8.
Meanwhile, authorities may establish a rail line development
foundation of RMB200-300bn/yr ($32.42-48.62bn/yr), with a plan
released jointly by the National Development and Reform Commission,
the Ministry of Finance and the Ministry of Transport on June 25.
Source: CCM
The PMI index for the steel sector hit 48.3% in June, up 1.9
percentage points from the previous month, though remaining
below 50% for the second straight month.
The countrys manufacturing confidence may have climbed even
further in July, with the HSBC flash PMI hitting 52 in the month,
up from Junes final reading of 50.7. It was the highest level since
January 2013, and stands above the 50-point boom-or-bust line for
the second consecutive month.
The production index for June was 52.8, hitting the highest in 16
months, while the new orders index climbed to a 18-month high
of 53.7. Increases were also reported for the indices of new export
orders, employment and input prices.
temperatures, with total consumption at 463.9bn kWh, up 3.27%

from 449.2bn kWh in May, and rising 5.9% from June last year,
according to the National Energy Administration.
The year-on-year growth climbed from 5.3% in May and 4.6% in
April. And on a daily basis, the June figure came to 15.46bn kWh/day,
growing 6.7% from 14.49bn kWh/day in May.
Consumption of the industrial sectors was 342.3bn kWh in
June, up 1.06% from 338.7bn kWh in May, but the average daily
figure came to 11.41bn kWh/day, up 4.4% from Mays level of
10.93bn kWh.
Consumption of the service sector and households also
increased. The use of the service sector was 54.7bn kWh, up
from 47.5bn kWh in May, and rising 9% from June last year. And
households consumed 51.1bn kWh, up from 48.9bn kWh in May,
and expanding 8.1% year-on-year.
Consumption from the extractive, agriculture and forestry sectors
was 9.8bn kWh, climbing from 8.3bn kWh in May, and up 0.3% y-o-y.
Total power consumption in H1 came to 2.63 trillion kWh,
growing 5.3% from the same period of last year. And industrial
demand was 1.9 trillion kWh, up 5% y-o-y.
The service sector used 313.8bn kWh in the period, up 6.9%, and
residential use also climbed 6.6% to 337.8bn kWh. But consumption
of the agricultural sectors remained low at 43.5bn kWh, down 4.6%
from the same period of last year.
Chinas power demand (bn kWh)
Chinas railway construction

to accelerate in H2
Sector
Chinas construction of railways is to gain speed in H2 this year,
Extractive,
agriculture
and forestry
amid the governments efforts to support economic growth through

infrastructure construction.
Construction on 14 railways has been started or will kick off
shortly, and approvals for an additional 44 projects will be handed
out by the end of August, according to China Railway Corporation.
The first 14 railways will have a combined length of 3,712km, and
Industrial and
construction
Jun-14 May-14
Jun-13
Year-todate 2014
Year-todate 2013
Change
%
348.2
344.5
331.6
1,932.50
1,841.90
5.1
9.8
8.3
9.9
43.5
46.1
-4.6
6.9
Services
54.7
47.5
49.8
313.8
292.5
Household
51.1
48.9
47
337.8
315.6
6.6
463.9
449.2
438.4
2,627.60
2,496.10
5.3
Total
Source: CCM
mccloskeycoal.com
Leads
Chinas hydro power

outputstrong in June
Chinas hydro power output saw a strong increase in June, a major
factor in the decline of thermal coal prices in recent weeks.

Total hydro power production came to 87.5bn kWh in the month,
up 18.24% from May.
On a year-on-year basis, the growth was 4.4%, down from 9.2% in
May and 21% in April, according to the National Bureau of Statistics,
which measured only the output of power plants above 6,000kW.
The lower y-o-y growth in June was mainly due to a number of
hydro-rich regions suffering from droughts in the same month of last
year. Less than normal rainfall is understood to have emerged again
in some regions in the month.
Average water supply into the Three Gorges reservoir stood
at 15,612m3/second in June, down 16.06% from normal levels in
previous years, and the supply to Xiangjiaba slumped by 46.54%.
The total usable water level was 24.97bn m3 at the end of June,
down 3.98bn m3 or 15.94% from a year ago. Such a level allows for
4.37bn kWh of power generation, down 647 million kWh or 14.81%
year-on-year.
The strong hydro production squeezed demand for thermal power,
with the figure rising to 346.1bn kWh in June, up just 1.7% from
340.3bn kWh in May, though up 6% y-o-y.
Year-to-date hydro power output stood at 371.3bn kWh, up 9.7%
from H1 last year, although the growth has slowed from 11.3% in the
first five months, and is also lower than 11.8% in H1 last year.
Coal miners see financial

status worsen in China
The financial status of Chinas coal miners has worsened further
due to slumping coal prices, and this has pressed local governments
to provide continued support to miners.
Port prices have slumped to the lowest levels for at least seven
years, with spot prices at RMB485/t ($78.86/t) FOB as of mid-July,
basis 5,500kc NAR.
This compares to RMB583/t ($94.80/t) one year ago, RMB641/t
($104.23/t) two years ago, and RMB837/t ($136.10/t) three years ago,
based on the Bohai-Rim index.
Profits of Chinas coal industry had slumped to RMB51.26bn
($8.33/t) in the first five months of this year, down 43.9% year-onyear, according to the National Bureau of Statistics.
Meanwhile, a survey carried out by the China National Coal
Association (CNCA) showed that of the 36 coal groups surveyed in 17
producing provinces, 20 operated in the red from January-May, with
an additional nine struggling at the break-even point.
Producers in nine provinces were operating at losses across the board,
with difficulties particularly severe in traditional mining regions.
In Shanxi, of the local 1,100 miners, 606, the equivalent of 53%,
incurred losses in the period, with 27 projects suspending operations
due to losses.
Further cost reductions at the mines have become increasingly
difficult, as the costs in safety expenses, payroll, compensation for
surface subsidence, and environmental work have exceeded 70% of
the production costs for a large numbers of producers.
mccloskeycoal.com
Adding to this is the mounting financial costs at major companies,

which increased 16.2% to approximately RMB4bn ($0.65bn) after
massive consolidation in previous years.
In Shanxi, the seven major groups have spent RMB120bn
($19.48bn) for consolidation, with at least an additional RMB100bn
($15.15bn) earmarked for later.
As a result, the average debt-liability ratio of Shanxis major coal
companies topped 70% at the end of April, with the rate for some
groups exceeding 80%.
Local governments release coal favouring policies

Local governments in major coal-producing regions are kicking off
more measures to ease producer burdens, in a bid to prevent miners
going bankrupt.
Inner Mongolia lowered a number of local charges, estimated
at RMB10/t ($1.63/t), on July 1, with a number of fees collected by
railway bureaus also lowered from July.
The neighbouring Shanxi province is looking to scrap charges
on coals transported to other regions, although the rate has been
lowered to RMB17/t ($2.76/t) from RMB32/t ($5.20/t).
Prior to this, Shanxi reduced five local charges at a combined rate
of RMB14.3/t ($2.33/t) in June.
Shaanxi, the third largest producer in China, has allowed coal
mines to use mining licences as mortgages in applying bank loans.
Meanwhile, the province also plans to suspend highway tolls for coal
trucking in H2.
Heilongjiang in northeast China decided to inject RMB3bn
($487.80bn) into Longmei, the largest coal producer in the province.
The company is on the verge of bankruptcy, with liabilities topping
RMB40bn ($6.50bn) and a debt ratio above 82%.
Sichuan province in south-western China also suspended its coal
price adjustment fund on June 3, and two weeks later it released another
document requiring more reduction in coal related fees and surcharges.
This has done little to help mine profits improve, however, as
market prices suffered steeper falls in July following the release of
the policies.
CEC adjusts down power

demand forecast
is expected to increase 6% this year
to 5.64 trillion kWh, from 5.32 trillion kWh in 2013, China
Electricity Councils (CEC) secretary-general Wang Zhixuan
forecast on July 24.
The growth rate represents a slowdown from 2013s level of 7.5%,
and also stands below the CECs previous expectation of 7%, made at
the beginning of this year, and after H1 demand increased just 5.3%
to 2.63 trillion kWh.
This is amid continued gloomy prospects for Chinas H2 economic
performance, with problems mounting on local-government debts,
a rise in credit risks, and anticipation that real estate sector, which
accounts for some 15% in GDP growth, is set to cool further.
A recent survey indicates that most economists remain cautious
about GDP growth in Q3 and Q4, projecting the rate could be 7.4%,
down on Q2s 7.5%, and similar to 7.4% in Q1. This may put the whole
years growth at 7.4%, compared with the year target of 7.5%, and will
be the lowest level since 1990.
Chinas power demand
Leads
This is also reflected by the stable operation hours of power units,

which may stand at 4,400-4,500 this year, compared to 4,511 hours
in 2013. Performance for thermal units is forecast at 4,950-5,000
hours, versus 5,012 hours last year.
CECs statistics indicate that 96GW of new power units are set
to be commissioned this year, bringing overall power capacity to
1,340GW by the end of 2014, which is a growth of 7.5% year-on-year.
Separately, 30GW of additional coal-fired units will be put into
operation, increasing the capacity to 820GW by the end of 2014.
Capacity of non-fossil units will increase 60GW to 450GW, accounting
for 34% of the total, versus the proportion of 30.6% in 2013.
Wang believes that Chinas power tariffs will enter a rising path, as
the country has been investing heavily on green power, which tends
to be more expensive.
Datang withdraws
from coal-to-chemicals
Datang Power has agreed to sell all its coalto-chemicals assets
to China Reform Holdings Corp., a state-owned asset management

company under the State-owned Assets Supervision and
Administration Commission, after encountering various difficulties
financially and technologically.
According to the agreement reached by the two sides on July 7,
the transfer of assets will cover two coal-to-gas facilities in Inner
Mongolias Keshiketeng and Liaonings Fuxin respectively.
Both had been Datangs flagship projects in the coal conversion sector.
The Keshiketeng plant was Chinas first coal-to-natural gas
project. The first 1.33bn m3/yr production line was commissioned at
the end of December last year, but operations were halted by major
technological problems for nearly two months, just a month after
production began.
For the first phase alone, costs of construction stood at RMB16.5bn
($2.68bn). Two more production lines will be completed late this year
and next year, adding 4bn m3/yr to the total capacity.
The Fuxin project was also designed at 4bn m3/yr, with
construction having started in 2010. Datang had aimed at
commissioning at the end of 2013, but has yet to start operations as
of the end of July.
The asset sale also includes a number of projects developed in
Inner Mongolia, such as the coal-based methanol-to-propylene
facility in Duolun, a coal-based fertilizer plant in Hulunbuir, and a
coal mining company in Xilinhot.
It is understood that other power companies are faced with similar
problems as well, and some of them have also started splitting assets.
Guodian Group, Chinas second largest power generator, decided
to sell its 45% stake in Ningxia Energy and Chemical Company for
RMB2.6bn ($421m) to a subsidiary of Sinopec in April this year. After
the sale, Guodian will hold a 5% stake in the company.
Chinas power groups began to expand into the coal conversion
sector in 2010, when they took over large amounts of coal resources
from local governments.
For a 7bn tonne lignite deposit in eastern Inner Monglia, Datang
agreed to build a 0.46mt/yr coal-to-polypropylene project and a 4bn
m3/yr coal-to-natural gas plant in the region. And in order to develop
60mt/yr of coal reserves, Guodian decided to build six coal-tochemicals projects.
However, various problems emerged after these projects are

initiated, such as a lack of funds, mature technology and a lack of
professional knowledge.
Datang has spent RMB58.4bn ($9.50bn) on the projects. However,
most have been incurring losses, as well as delays. These projects
created a combined deficit of RMB2.1bn ($340m) to the company in
2013, with total debts hitting RMB59.7bn ($9.68bn).
The losses were in contrast to the RMB8.8bn ($1.43bn) of profits
generated by the company from its thermal power business last year,
and dragged down its overall profits by 11% to RMB3.5bn ($567m).
Higher costs than previously expected also brought extra pressure
to generators. For Datangs coal-to-natural gas plant in Inner
Mongolias Keshiketeng, the total costs have exceeded RMB31.3bn
($5.09bn), versus the originally estimated RMB25.7bn ($4.18bn).
And its coal-based methanol-to-propylene facility in Duolun has
cost an additional RMB6.18bn ($1bn) compared with the previously
expected RMB16bn ($2.60bn).
China promotes
low emission units
China is expected to initiate an upgrading campaign among coal-
fired thermal power plants, aimed at reducing emissions of thermal

power amid increasing air pollution pressure.
This is thought to be spurred by the implementation of Chinas
strict air pollution standards for thermal power plants on July 1,
which set maximum dust emissions at 20mg/m3, SO2 emissions at
50mg/m3, and NOx emissions at 100mg/m3.
It is also backed by recent successful experiences by generators
and local governments, the latest being the commissioning of
Shenhuas nearly zero emissions unit at its Zhoushan Power Plant
in Zhejiang on June 25.
Through upgrading, the 350MW unit has achieved virtually
zero emissions, with emission figures less than half of the levels
for natural gas-based units. Specific figures are 2.5mg/m3 of dust,
2.8mg/m3 of SO2 and 20.5mg/m3 of Nox.
It is understood that a number of companies and local governments
have drawn up plans for thermal power plant upgrading.
Shenhua plans to rebuild 46 of its existing 61 coal-fired units by 2017,
and newly-built units will be fully in line with the same standard.
Zhejiang province requires emissions of major pollutants from all
its coal-fired power plants to reach the emission standards of natural
gas-based units by 2017.
Guangzhou aims to upgrade 14 coal-fired units with combined
capacity of 3.8GW by July 1, 2015. Guangzhou is looking to reduce its
thermal power emissions by 60-70% by 2020 from 2013 levels.
All of the five major power groups are also understood to be
making plans for technical upgrading on units in east China, and
have started a number of tests for that purpose.
Datang has said that it will upgrade its two 660MW units at
Nanjing into units of ultra-low emissions, and will finish the work by
the end of this year.
Guodian is upgrading its facility at its Shiheng power plant in
Shandong, and Huadian is carrying out the work at the Laizhou
power plant, also in Shandong.
This is also proving feasible economically. The upgrading is
expected to see an extra cost of RMB0.01-0.015/kWh ($0.0016mccloskeycoal.com
Leads > Macroeconomic > Government
$0.0024), from the current thermal power production cost at

RMB0.3-0.4/kWh ($0.0486-$0.0648).
This is based on the calculation that the upgrading work usually
costs RMB160,000-200,000/MW ($25,931-$32,415), and brings the
total costs to RMB0.31-0.415/kWh ($0.0504-0.0675/kWh).
The figure is still much lower compared with the cost at gas-fired
units, which average RMB0.8/t ($0.1297/t), on the basis of gas prices
standing at RMB2.7/m3 ($0.44/m3) currently.
This is also in line with the strategy of the central government,
with president Xi Jinping calling for a revolution in energy
technology and production in June.
Its likely that coal will continue to dominate Chinas energy
supply in the next few decades once the problem of emission control
is well addressed, analysts said.
Macroeconomic
China to accelerate
infrastructure building
The Chinese government is set to focus at pushing infrastructure
construction in the near future, after statistics indicate that its own
7.5% GDP growth target set for the year could be missed.
Economists are largely projecting Q3-Q4 performance at below
7.5%, although the National Bureau of Statistics (NBS) pegged H1
GDP growth at 7.4%.
Of the 31 provinces and municipalities, 30 have failed to achieve
their growth targets in H1, although a large number of regions started
to prepare local incentives since last month, according to the NBS.
The State Council said that work groups it had sent to some
provinces and government departments have anticipated that GDP
growth in many regions will continue the earlier down trend.
In light of this, the State Council promised, at a recent meeting,
that it would work to ensure the 7.5% target is fulfilled.
To achieve this, the central government has called for a speed up in
the construction of rail lines, urban infrastructure, hydro facilities,
as well as the reconstruction of old urban areas.
China pushes mixed ownership

The Chinese government is busy pushing the mixed ownership
concept to the countrys large numbers of state-owned enterprises

(SOEs), in a bid to promote competition, reduce corruption, while at
the same time boosting investment.
A pilot plan is expected to be announced very soon, a source
from the State Owned Assets Supervision and Administration
Commission revealed.
Companies that will be covered by the pilot plan include Guodian,
COFCO, China Resources, China National Building Materials Group,
State Development and Investment Corporation (SDIC), China
Merchants Group.
China has seen limited progress in reforming SOEs in the past due to
strong resistance from various interest groups. Authorities hope that
via the reforms, the interest from private firms in investing into SOEs
will increase, although the idea is still being questioned by observers.
However, the process is still expected to be cautiously carried out.
The state-asset watchdog the State Owned Assets Supervision and
mccloskeycoal.com
Administration Commission - has set the tone for the upcoming

reform, according to which the process will be long-termed with the
promise of careful research and testing.
For industries where full competition has evolved, the
government is ready to withdraw completely and let private firms
play out their roles, although the list for such sectors has not been
worked out as yet, the agency said.
In high-tech industries or growth-engine industries, the
government may retain a controlling position, in a bid to exercise
influence on the macro economy.
For areas which are critically important for the economy, the
government may still insist on absolute ownership in related
companies. Sectors that are concerned with national security will be
completely off limits to private companies.
The agency has planned to release a detailed plan guiding the
reform within 1-2 weeks. Based on the agencys position so far, its
expected the plan will not be as attractive as top officials have hoped,
analysts believe.
Its understood that a large number of Chinas major groups have
already prepared plan for ownership reform, but the agency has not
allowed them to proceed with them at present.
Government
China tightens control

overcoal conversion
China has increased its control over the development of coal
conversion projects, with a new rule released by the National Energy
Administration on July 17, However, more detailed thresholds are
still being drafted and will be imposed soon.
According to the new rule, laid out in an official document, coal
gasification facilities should be above 2bn m3/yr in capacity, with coal
liquefaction facilities below 1mt/yr also being banned.
It also stipulated that regions with limited water resources and
already high emission levels will not be allowed to build new coal
conversion projects.
The move is understood to come after the rising concerns emerged
recently over technical and environmental problems, as well as the
profitability outlook for the sector.
Coal gasification projects are believed to be facing more challenges
compared with coal liquefaction. The top coal gasification developer,
Datang, has agreed to sell its two coal gasification facilities, its Inner
Mongolian Keshiketeng plant and its Liaonings based Fuxin plant,
respectively (see related story).
Technological and financial difficulties are understood to be behind
Datang decision to split the assets. Similar difficulties are also said to
have delayed the 4bn m3/yr project by Guanghui in Xinjiang.
Water supply is another concern for the development of coal
conversion projects, as 80% of the planned capacity is located in
northwestern China, which has limited water supply.
The planned coal gasification plants in Xinjiang alone are expected
to consume 680mt a year of water, at a time when Xinjiangs water
consumption has already exceeded an earlier set maximum limit. In
2013, consumption was 61.7bn tonnes, versus the limit of 51.56bn
tonnes/yr set by the central government for 2015.
China has commissioned 2.7bn m3/yr of coal gasification facilities
Government
so far, including the first phase of Datangs Keshiketeng plant at

1.33bn m3/yr and the first phase of Qinhuas plant in Xinjiangs Yili at
1.375bn m3/yr. Projects with approximately 200bn m3/yr of capacity
have been approved or planned.
The coal-to-oil sector has built 1.45mt/yr of facilities across the
country. This includes the 1.08mt/yr plant in Inner Mongolias
Erdos by Shenhua, the 0.16mt/yr by Yitai also in Erdos, 0.21mt/
yr by Luan in Shanxi. Meanwhile, another 18.22mt/yr of facilities
have received approvals.
Xinjiang plans giant

coalscheme
The coal-rich remote region of Xinjiang in northwest China has
drawn up ambitious plans for coal development, with plans for 22

mining areas approved by the central government.
The 22 mining areas, with combined capacity at 817mt/
yr, include the mining areas of Wucaiwan, Dajing, Xiheishan,
Santanghu, Naomaohu, Balikun, western part of Dananhu,
Tashidian, Kemusite, Kbuerjian, Aai, Hutubi Baiyanghe,
Taerlanggou, Baicheng, Kelatuzi, Buya, Ehuobulake, Liuhuanggou,
Sulahema, Shajihai, Yining and Dananhu.
Meanwhile, Xinjiang is looking at gaining approval for 20
additional plans, with 12 totaling 522mt/yr awaiting consent, and
plans for eight new mines, at 407mt/yr, being made.
Total capacity of the 42 mines will total 1.75bn tonnes/yr, roughly
a half of Chinas total output of 3.7bn tonnes last year.
Xinjiang is aiming at a coal capacity of 400mt/yr by 2015, of
which 100mt/yr will be sold to other provinces, from around
30mt/yr currently.

Xinjiang in north-western China has geared up for railway
construction, with work on three major railways started so far this year,
and another two expected to enter construction by the end of the year.
The most recent project was the 629.9km Ejina Hami line, which
kicked off on July 3. It will be capable of delivering 30mt/yr, with
total costs at RMB8.87bn ($1.44bn).
This will comprise 212km within Xinjiang, 127km in Gansu, and
290km in Inner Mongolia. The railway will become another outlet
of Xinjiang, as it will connect to the Lince line at the east end, thus
enabling cargoes to reach eastern coastal areas.
Prior to this, two railways began construction in April, with work
on the Kelamayi-Tacheng line having started on April 13 and the
Beitun-Aleai line following on April 26.
The Kelamayi-Tacheng line will be 291km long and will be capable
of railing 10.42mt/yr upon completion in late 2016. Costs are
estimated at RMB5.4bn ($878m).
It will be connected to railways in Kazakhstan at the Baketu
border crossing, which will become Xinjiangs third outlet to Central
Asia and Europe.
And the Beitun-Aleai line, at 67km long, will be commissioned in
October 2015. The railway is to deliver 3.18mt/yr in its initial stage,
with spending at RMB8.27bn ($1.34bn).
Xinjiang is also trying to start construction on two more lines this
year. One of these will run from Kuerle in Xinjiang to Geermu in the
neighbouring Qinghai, which obtained approval from the National
Aletai
Xinijang wins green lights for two mines
Tacheng
RUSSIA
Two new mines were cleared to start initial preparations in July, with
combined capacity of 31mt/yr.
One is the second phase of the Dajing coal field, which could
produce 20mt/yr. The coal field as a whole is designed to mine 30mt/
yr, with the first 10mt/yr having been approved in 2012.
The Dajing coal field is a supporting project to the 1,100kV power
line from Zhundong to Anhui in east China, which is expected to
enter construction in H2 this year.
The power line will have a capacity of 13.2GW, and will be capable
of supplying 66bn kWh of power.
The other mine is the 12mt/yr Alaandaonan coal mine at the
Kemusite mining area. The coal mine will mainly supply Guanghuis
4bn m3/yr coal gasification project, which is scheduled to be
commissioned in 2015.
Kelamayi
Kuerle
MONGOLIA
Beitun
Jiangjunmiao
Naomaohu
Urumqi
Hami
Ejina
Hongliuhe
Xinjiang
Inner
Gansu
Towns/cities
Geermu
Tibet
Source: CCM
Lanzhou
Qinghai
2014 IHS
New railways being constructed or planned in Xinjiang

Railway
Second Lanzhou-Urumqi line
Length Capacity
1,776km Passenger line
Costs
Status
Completion
RMB143.5bn ($23.33bn)
Construction started in November 2009.
2014
Hongliuhe-Naomaohu
435km 50mt/yr
RMB10.87bn ($1.77bn)
Construction started in March 2012.
2015
Kelamayi-Tacheng
291km 10.42mt/yr
RMB5.4bn ($878m)
Construction started on April 13.
2016
RMB8.27bn ($1.34bn)
Construction started on April 26, 2014.
Oct-15
RMB8.87bn ($1.44bn)
Construction started on July 3, 2014.
-------
RMB16.96bn ($2.76bn)
Construction may start in 2014.
-------
RMB36.5bn ($5.93bn)
Construction may start in November 2014.
-------
Beitun-Aletai
Ejina-Hami
Jiangjunmiao-Hami
Kuerle-Geermu
67km 3.18mt/yr
649.8km 30mt/yr
661km 34mt/yr
1,223km 50mt/yr
Source: CCM
mccloskeycoal.com
Government > Markets
Development and Reform Commission in November last year.

The 1,223km-long railway will include 709km in Xinjiang and
514km in the neighboring Qinghai province, and will become
another major line connecting Xinjiang to other regions. It will be
50mt/yr in capacity and total costs are around RMB36.5bn ($5.93bn).
The other one is the Jiangjunmiao-Hami line, which is 661km long
and will be capable of delivering 34mt/yr. The railway will join up to
the Ejina Hami line at Hami.
Meanwhile, Xinjiang is to conclude the construction of the second
railway from Urumqi to Lanzhou at the end of this year. The 1,776km
railway will be a passenger line, but will enable the existing Urumqi
-Lanzhou line (70mt/yr) to be used as a cargo line.
In addition to this, the region will complete the HongliuheNaomaohu line next year.
The railway is 435km long and will deliver 50mt/yr, with total
costs at RMB10.87bn ($1.77bn).
Xinjiangs railways totaled 4,911km at the end of 2013, up 518km
from the end of 2012. It is expected to reach 8,200km by 2015.
Chinese steam coal, iron ore

swaps to debut in August
China is to launch steam coal and iron ore swaps on the Shanghai
Clearing House on August 4, following official approval being
received in mid July.
The RMB-settled trades will allow all Chinese registered
companies to participate, with the steam coal swaps to be cleared on
the basis of the FOB price of 5,500kc NAR materials pegged by the
government-run weekly Bohai Rim index.
The contract size for steam coal swaps will be 200t, with minimum
price fluctuation of RMB0.01/t ($). Three kinds of contracts will be
released, including the monthly, quarterly and yearly.
The iron ore swaps will be based on the spot rate of 62% Fe
products at ports, which will use the average the four domestic
indices released separately by Custeel, Mysteel, and Beijing
International Mining Exchange.
Contract size of the iron ore swaps will be 100 wet tones, with
minimum fluctuation also at RMB0.01/wet tone ($).
China launched steam coal futures at the Zhengzhou Commodity
Exchange in September last year, and kicked off the trading of
the iron ore futures one month later in October at the Dalian
Commodity Exchange.
SCH was founded in 2009 jointly by China Foreign Exchange Trade
System, China Government Securities Depository Trust & Clearing
Co., Ltd., China Banknote Printing and Minting Corp. and China
Gold Coin Incorporation. It plans to trade energy, chemicals, metals
and agricultural products by 2015.
Markets
Chinese met prices

edgedown further
Chinas coking coal market has been relatively stable during July,
backed by higher steel production. However, prices remained bearish
as supply increased while the steel market remained gloomy.
mccloskeycoal.com
In the top producing region of Shanxi, the price of high quality

Liulin No.4 material (21% volatiles, 0.5% sulphur and 9% ash) was
RMB800-850/t ($130.08-138.21/t) on July 25, down RMB10/t
($1.63/t) from RMB810-860/t ($131.71-139.84/t) at the end of June.
The price had been down RMB310-340/t ($50.41-55.28/t), down
roughly one quarter compared with RMB1,150-1,170/t ($186.99-190.24/
t) at the end of January, when this latest round of price declines started.
Steel mills have asked the suppliers to lower the price by a further
by RMB30-50/t ($4.88-8.13/t) atfor the end of -July, with final rate
still being negotiated.
Shandong-based Yankuang Group, a major coking coal producer,
announced in mid-July that its coking coal prices had been lowered by
an additional RMB30/t ($4.90/t), which has pput the combined declines,
since the beginning at this year, at around RMB250/t ($40.60/t).
For small producers which lack reliable sales channels, the situation
is thought to be even worse, with massive closures being recorded.
Wuhai Energy Company, Shenhuas major coking coal producer in
Inner Mongolia, has suspended operations on July 11 due to the huge
losses. The company has a capacity of 16.15mt/yr.
Its believed that all the mines in Wuhai have either shut down
completely or operating at a minimum level, as demand has dipped
to the floor while prices for local semi-soft coking coal stand at just
RMB600/t ($97.4/t) FOR.
It is thought that domestic price levels have largely been the result
of international price movements, which saw Austrian products
soften by $21.05/t, to $114.2/t FOB on July 25, from $135.25/t FOB
at the end of December last year, according to the IHS McCloskey.
Therefore, the countrys seaborne imports remained high at 5.72mt
over June, after buying 5.88mt in May. This figure was up more than
1mt compared with 4.7mt imported in June last year.
However, domestic coking coal prices may come under long-term
pressure, with Mongolia seeking to expand delivery to China from
2014-2034, with yearly tonnage to hit 64mt by 2035.
The country shipped 7.53mt to China in the first six months,
up 26.2% y-o-y. Meanwhile, average prices of Mongolian products
slipped from $69.53/t in January to $56.82/t in June, according to
Chinese customs statistics.
Chinas coal exports

pick up further
Chinas coal exports climbed marginally in June, amid a slump
in the domestic market, with total deliveries coming to 0.46mt, up
from 0.43mt in May and 0.28mt in April, but still lower than 0.69mt
in June last year, according to a survey of exporters by MCCM.
Shenhuas deliveries rose to 0.23mt in June, up from just 0.07mt in
May, but lower than 0.34mt in June last year. China Coals tonnage
fell to 0.14mt from Mays 0.36mt, and was also lower than 0.19mt
delivered in June 2013.
Minmetals shipped nothing for the fourth month in a row, while
Shanxi exported 0.09mt from nothing last month, and down from
0.15mt in June last year.
Customs pegged June exports at 0.4mt, down from 0.49mt in May,
and slipping 16.7% year-on-year.
Ports recorded June deliveries at 0.55mt, up marginally from
0.52mt in May, but down from 0.72mt in June 2013.
Year-to-date exports stood at 2.66mt, down 11.2% from H1 last year,
Markets > Power industry

Exporter survey (000t)
Company
Jun-14
May-14
Change y-on-y %
YTD 2014
YTD 2013
Change y-on-y
%Change y-on-y
Shenhua
230
70
340
110
-32.4
950
1,310
-360
-27.5
China Coal
140
360
190
-50
-26.3
1,400
1,290
110
8.5
-5
64
77
-13
-16.7
Minmetals
Shanxi
Total
Jun-14 Change y-on-y
85
150
-7
-43.3
24
313
-70
-23
460
430
690
-240
-34.1
2,660
2,990
-330
-11.2
Source: CCM
Chinas coal exports by exporter survey (mt)

0.70
0.65
0.60
0.55
0.50
0.45
0.40
0.35
Jun 14
May 14
Apr 14
Mar 14
Feb 14
Jan 14
Dec 13
Nov 13
Oct 13
Sep 13
Aug 13
Jul 13
0.25
Jun 13
0.30
Source: CCM
on-year, according to the National Bureau of Statistics, (which only

includes output from units above 6MW).
Junes output included 346.1bn kWh of thermal power, which rose
from 340.3bn kWh in May and expanded 6% from June last year. The
figure accounted for 75.6% of the countrys total power output, down
from 76.2% in the same month of last year.
Year-to-date power output stands at 2.62 trillion kWh, up 5.8% yearon-year, with the rate climbing from 5.7% over the first five months.
Year-to-date performance of thermal power units was 2.1 trillion
kWh, rising 4.7% year-on-year. The rate was lower than total power
output due to strong hydro power generation so far this year, but has
climbed from 4.2% in the first five months.
Year-to-date hydro power generation came to 371.3bn kWh,
increasing 9.7% from the same period of last year. However, the rate
has slowed down compared with the year-on-year growth of 11.3% in
the first five months.
according to the MCCM survey. China Coal shipped 1.4mt, up 8.5%

y-o-y, and Shenhua delivered 0.95mt, slumping 27.5% from H1 last year.
The year-to-date figure from the customs stood at 3.16mt,
slumping 22.4% y-o-y, but the port figure climbed 2.6% to 3.56mt.
Hydro power capacity

jumpsin China
SOEs dominate Chinas

topcoal importers
of the year, following the completion of major hydro power plant

projects in south-western China.
The country commissioned a total of 13.01GW of new hydro power
units in the period, soaring 46.34% on 8.89GW in H1 last year,
according to the National Energy Administration.
This brought total hydro power capacity to 253.72GW as of the end of
June, up 14.4% from one year ago, when year-on-year growth was 9.63%.
The capacity of new units coming online in June alone hit 4.66GW,
surging 51.79% from 3.07GW in May, and more than doubling the
2.03GW completed in June last year.
This included the last two units of the Xiluodu Hydro Power Plant,
which began operating on June 29 and June 30 respectively. The
power plant is located on the Jinsha River in the bordering area of
Sichuan and Yunnan provinces, and comprises 18 units in total.
The total capacity of the plant stands at 13.86GW, the second largest
in China after the Three Gorges (22.5GW), and third largest in the
world after the Itaipu Hydroelectric Power Station (14GW) in Brazil.
The Nuozhadu Hydro Power Plant, which lies on the Lancang River
within Yunnan province, also brought its last unit online on June 26.
The power plant comprises nine 650MW units, with total capacity at
5.85GW, the fourth largest in China.
And in early June, the Jinping No.2 hydro power plant on the
Yalong River also commissioned a new unit, bringing the plants
total capacity to 3.6GW. The power plant is expected to reach
capacity of 4.8GW when two more units are completed by 2015.
The high growth in hydro power capacity is thought to have
continued into July, with the last units of the Xiangjiaba Hydro
Private firms based in south China, which used to take a
controlling position in the countrys coal imports, have largely

retreated over the past two years, after incurring huge losses, with a
number of them going into bankruptcy.
By contrast, Chinese state-owned enterprises (SOEs) have
increased their stakes in the imports market, on the back of strong
financial support from their groups.
Of Chinas top 20 coal importers in the first half, only two were
from the private sector, which are Shenzhen-based Rixin Shenglong,
and Guangzhous Yuehe.
This is compared to 2013, when five were private companies, and in
2012, when the number of private firms stood at eight.
Chinas top 20 importers imported a combined 51.51mt in H1,
accounting for 32.2% of the countrys total of 159.87mt.
Power industry
Power output climbs in June

Chinas power output expanded in June, as temperatures climbed
and the macro economy improved.
Total power generation came to 458.1bn kWh over the month, up
16.5bn kWh, or 3.7%, from 441.6bn kWh in May, and rising 5.7% year12 | China Coal Monthly July 2014 2014 IHS
Chinas hydro power capacity has grown rapidly in the first half
mccloskeycoal.com
Power industry
Chinas major hydro power plants
Power plant
Capacity
Unit Completion
Three Gorges Project
22.5GW
34
2010
Xiluodu Hydro Power Plant,
13.86GW
18
2014
Xiangjiaba Hydro Power Plant
6.4GW
2014
Nuozhadu Hydro Power Plant
5.85GW
2014
Jinping No.1 Hydro Power Plant
3.6GW
2014
2015
Jinping No.2 Hydro Power Plant 4.8GW (3.6GW completed)

Source: CCM
Major power lines from southwestern China

Power lines
Xiluodu-Zhejiang
Type
Length
800kV
1,653km
Capacity Completion
8GW
2014
2009
Xiangjiaba -Shanghai
800kV
1,900km
6.4GW
Jinping-Jiangsu
800kV
2,059km
6.4GW
2012
Nuozhadu-Guangdong
800kV
1,451km
5GW
2013
Source: CCM
Power Plant and Jinping No.1 hydro power plants being completed on
July 10 and July 12 respectively.
The Xiangjiaba plant is on the Jinsha River, and has a total capacity
of 6.4GW, the third largest in China. And the Jinping No.1 plant is
built on the Yalong River, with the combined capacity of the six
600MW units totaling 3.6GW.
The commissioning of new hydro power plants has enabled more
power transmission to east China regions.
Major power lines from these power plants includes a 1,653km
long line from the Xiluodu Hydro Power Plant to Zhejiang, which
was commissioned on July 3 this year. The 800kV line is capable of
sending 40bn kWh/yr of power, based on capacity of 8GW.
The Xiangjiaba Hydro Power Plant was connected to Shanghai via a
1,900km long 800kV line completed in 2009, with capacity at 6.4GW.
And the Nuozhadu plant mainly supplies Guangdong via an 800kV
power line commissioned in September last year. The power line is
1,451km long and designed at 5GW.
Meanwhile, the Jinping No. 1 and No. 2 plants were linked to
Jiangsu by a 2,059km-long line completed in 2012. The capacity of
the line was designed at 6.4GW.
The combined capacity of the four power lines totals 25.8GW,
which is equivalent to more than 10% of the maximum power load of
the East China Grid. They are expected to reach full capacity when
demand peaks this summer, according to the State Grid.
Chinas State Grid to

accelerarate UHV building
The State Grid is planning to further speed up the construction of UHV
lines over the second half of the year, after a spending of RMB158.8bn
($25.74bn) in H1. This was an increase of 8.9% year-on-year.
The grid expects to kick off work on 10 UHV power lines in H2,
increasing expenditure to RMB381.5bn ($61.8bn) for the whole year.
This represents a year-on-year increase of 12.9%, after a growth of
10.64% in 2013.
Construction on the 1,000kV Huainan-Nanjing-Shanghai AC UHV
line started recently, while the Xilingol Shandong line, and the
western Inner Mongolia Tianjin line, have finished feasibility studies.
China wants to lift the UHV power transmission capacity to
mccloskeycoal.com
210GW by 2015, and further to 450GW by 2020. China unveiled a

giant UHV construction scheme in May, covering 12 UHV lines, with
estimated cost at RMB200bn ($32.5bn).
Chinas trans-regional power transmission hit 115.5bn kWh in the
first half of this year, rising 14.8% year-on-year. Inner Mongolia was
the top supplier, selling 71.7bn kWh, or 18.8%, of the total, followed
by Shanxi at 40.1bn kWh, or 10.52%.
Power transmission via the UHV power lines within the 26
provinces under the State Grid reached 47.89bn kWh in the first half
of this year, jumping 102.8% year-on-year.
Chinas power industry

reforms to speed up
Chinas power sector is expected to embrace a series of deep
reaching reforms aimed at breaking the monopolies of the power grids.

It is understood that the National Development and Reform
Commission has completed the primary plan and is now collecting
opinions from related companies.
According to the draft, power transmission and distribution
will be separated.Grid operators will realise revenues only
through charging a maximum power transmission fee, instead of
earning the margins from differences between on-grid prices and
retailing prices.
Currently, Chinas power trading is monopolised by the two major
power grids, the State Grid and China Southern Power Grid.
The State Grid covers 26 domestic provinces, while the Southern
Grid covers Guangdong, Guangxi, Yunnan, Guizhou and Hainan.
These power grids have monopolised the buying, transmission,
distribution, and selling of electricity, and blocked the trading of
power between power plants and consumers.
Reforms in the sector have been slow in the past decade due to
objections from power grids.
It is only lately that resistance from power grids has reduced
significantly compared with a few years ago, after Chinese
authorities began sweeping reforms on state-owned groups and
launched anti-corruption campaigns.
Chinas last power reforms took place in 2002, when power generation
was separated from transmission. The system created five major power
groups and two power grids responsible for Chinas power supply.
Offshore wind farm growth

gains speed in China
China is expected to see rapid growth in offshore wind power
development, with newly-started capacity to soar after the release of

the on-grid power prices in early July.
For this year alone, construction on around 1.56GW of units will
begin, more than three times the total installed capacity of 0.43GW
in late 2013.
And in the three years between 2015 and 2017, 3.55GW of
additional capacity is expected.
The accelerated pace of offshore wind power development is thought to
be being backed by the setting of Chinas first-ever offshore wind power
prices by the National Development and Reform Commission on July 7.
According to the policy, the on-grid price of power supplied by
Power industry > Steel industry
Jul 23
Jun 9
Jun 30
May 12
Apr 1
Apr 23
Mar 3
Jan 8
Feb 13
Dec 16
Nov 21
Oct 8
Oct 31
Sep 18
Aug 6
Aug 27
Jul 16
Jun 3
Jun 24
Source: CCM
signs of improvement recent, with numbers moving up slightly.

The price of spot HRB400 rebars stayed at RMB3,100/t ($504.07/t)
in Shanghai on July 23, up just RMB30/t ($4.88/t) from RMB3,070/t
($498.38/t) on June 23, which marked its lowest point over the past
eight years since 2006.
Continued rising steel production has exerted great pressure on
the market prices, with the countrys crude steel output hitting an
all time high output of 2.31mt/day in June, rising from 2.27mt/day
in May, and 2.16mt/day in June last year, based on the data from the
National Bureau of Statistics.
The production may have expanded further in July, with the China
Iron and Steel Association forecasting a growth of 2.04% in early July
compared with end-June.
Fortunately, Chinas overall demand for steel has started to
improve, on the back of the governments incentive measures.
The PMI index released by National Bureau of Statistics showed
the reading for the steel sector had risen to 48.3% in June, up 1.9
percentage points from the previous month, although remaining
below 50% for the second straight month.
The new orders index for the sector also jumped, up to 50.7%, a
rise of 4.9 percentage points from May. The export orders index, in
particular, stood at 55.7% in June, rising 4.1 percentage points from
the previous month, and marking the third month above 50% in a
row and the highest in the past seven months.
Chinas daily crude steel output (mt)
2.35
2.30
2.25
2.20
2.15
2.10
Jun 14
May 14
Apr 14
Mar 14
2.00
Dec 13
2.05
Jan-Feb
being under the pressure from strong production rates and weak
demand. However, the countrys demand for steel has started to show
3000
Nov 13
Chinas steel prices remained at their current low levels, despite
3200
Oct 13
Chinese steel prices

remainat low levels
3400
Sep 13
Steel industry
3600
Aug 13
China commissioned 6.32GW wind power units in H1, growing 23%

from a year ago, and putting total wind capacity at 82.77GW by the end
of June, the National Energy Administration (NEA) said on July 28.
Xinjiang has commissioned 1.39GW, the highest among all
provinces, and followed by Shanxi and Shandong, at 660MW and
600MW respectively.
Wind power production for the first half of this year went up 8.8%
year-on-year to 76.7bn kWh, the NEA added.
However, the average operating hours of units were 979, falling
113 hours year-on-year. Separately, Yunnan recorded the highest
operating rate, at 1,681 hours, while Tianjins performance was 1,332
hours, and Sichuan at 1,294 hours.
The release also posted Chinas average wind power waste at 8.5%
in H1, down 5.14 percentage points from the same period a year ago.
3800
Jul 13
Chinas wind capacity

climbs23% in H1
Price of 16-25mm HRB 400 rebars in Shanghai (RMB/t)
Jun 13
coastal wind power units built before 2017 will be RMB0.85/kWh

($0.1382/kWh), and that of intertidal wind power units will be
RMB0.75/kWh ($0.1220/kWh).
The prices are slightly lower than previously expected, but will still
create 8-12% of profits for developers, industrial analysts calculate.
This may be coupled with subsidies from local governments.
For example, Shanghai announced on May 4 that it will subsidise
offshore wind power by RMB0.2/kWh ($0.0325/kWh) this year.
This lifted Shanghais price of coastal wind power to RMB1.05/
kWh ($0.1707/kWh), and the price of intertidal wind power to
RMB0.95/kWh ($0.1545/kWh).
China has rich offshore wind power resources, with the figure
between 5-25 meters of water standing at 200GW for the whole
country. This is equivalent to nine times the capacity of the Three
Gorges project, which totals 22.4GW.
But the country began development of the sector late, with
the first plant, Shanghai Donghai Bridge, completed in June 2010.
Further development was slow due to an absence of specified price
levels and immature technology.
The country had planned to reach 5GW of capacity by 2015, and
30GW by 2020, but the 2015 target is very likely to be missed based
on the current situation, as the installed capacity stood at less than
one tenth of the targeted 5GW as of the end of 2013.
The government is to accelerate the sector, with 17 projects
cleared to begin preparations last year.
These wind farms will have a combined capacity of 4.1GW, and are
situated mainly in Jiangsus Nantong and Lianyungang, Shandongs
Laizhou Bay, Hebeis Tangshan, east and west Guangdong, as well as
Hangzhou Bay, Taizhou and Wenzhou in Zhejiang province.
Source: CCM
mccloskeycoal.com
Steel industry > Production & Stocks
Stocks at major steel markets reflected the same scenario as these

indicators, with the tonnage of rebars surveyed by custeel.com
falling to 5.87mt on July 18, versus 6.05mt on June 27, 6.64mt on May
30, and 8.18mt at end-April.
Analysts expect the market to improve mildly in the next
few months, as construction of railways accelerates. But for the
long term, the outlook may remain bearish, given ongoing weak
fundamentals and overcapacity in the sector.
Chinese steel mills

profitability worsening
The profitability of Chinas steel companies has continued to
worsen, entering into a zero-profit era, according to Wang Liqun,

deputy secretary general of the China Iron and Steel Association
(CISA), speaking on July 24.
Some 88 major steel companies incurred a deficit of RMB4.07bn
($662m) from steel business activities in the first five months of
the year, which is RMB2.76bn ($449m) higher than the level from
January-May 2013. Sales margins were down to just 0.12%, down
0.1 percentage point from the same period of last year, according to
CISAs statistics.
Severe overcapacity is understood to be the biggest factor behind
this weak performance, with crude steel capacity hitting 976mt/yr
at the end of 2012. Crude steel production, however, was 779.04mt in
2013, elaborated Wang.
Environmental costs are also on a rise, with China set to
implement its most stringent environmental law in its history by
January 2015, with heavy fines faced by violators, and detention of
company leaders in case of severe pollutions offences.
However, the most difficult period for the sector is yet to come,
despite the industry currently struggling at the break-even, CISA
deputy secretary-general Chi Jingdong has said.
The slowdown in demand from sectors such as real estate,
infrastructure, machinery and automotive, amid Chinas economic
restructuring, is expected to remain bearish in the longer term,
further aggravating the sectors overcapacity, he added.
Its understood that Chinese commercial banks have tightened
new loan shresholds, with most of the steel companies predicted to
be unable to obtain sufficient bank financing in the future, while
companies are being pressed to make repayments, according to analysts.
Various local governments in China are realising that their
capability to help local steel mills out their current financial
difficulties is extremely limited, despite producers traditionally
being major tax payers and employers.
Insiders expect the situation to worsen rapidly across the sector,
resulting in dozens of closures and unpaid debts of at least tens of
billions of RMB at each.
More domestic steel mills have been heard to be struggling and on
the verge of bankruptcy, after Shanxi-based Haixin Steel shutdown
its furnaces in March.
Xilin Steel, the largest steel company in Heilongjiang, is only
operating one furnace at current, after its debts hit roughly RMB19bn
($3.09bn) in Q1, versus profits of RMB2.39m ($0.39m) in the period.
The debts of Sichuan-based Chuanwei Group hit RMB27.2bn ($4.42bn)
at the end of 2013, jumping 164% from 2011. This contrasts to the
companys assets, which climbed 98.3% to RMB36.2bn ($5.9bn) in 2013.
mccloskeycoal.com
Production & Stocks
Chinas H1 coal
productionfalls
Chinas H1 coal production was lower than the same period of last
year, due to weaker demand from downstream users and strong

hydro power output.
Total output came to 1.82bn tonnes in the first six months of 2014,
down 33.1mt, or 1.8%, from H1 last year, according to the China Coal
Transport and Distribution Association.
Output of major state-owned mines was 998.89mt, sliding 12.09mt,
or 1.2%, year-on-year. Private and local state-owned mines produced
817.11mt, down 2.5%, from 838.1mt in the same period of 2013.
The tonnage produced in June dipped to 298mt from 300mt in May,
but the average daily output climbed to 9.93mt from 9.68mt. Compared
with June last year, however, the figure dropped 6mt from 304mt.
The statistics indicated that June output from major state-owned
mines stood at 168.41mt, up marginally from 168.4mt in May,
but down 1.1% from June last year. Private and local state-owned
mines produced 129.59mt, which is down from 134.6mt in May and
133.75mt in June last year.
Shanxi remained the top producing province, after surpassing
Inner Mongolia in May. The provinces H1 output hit 478.25mt, up
9.32mt, or 2.0% year-on-year.
Shanxis June output was 91.54mt, rising further from 88.65mt in
May and 78.64mt in April. The five major companies there produced
42.73mt in June, climbing 9.6% from 38.97mt in May
Inner Mongolia mined 451.46mt in the first six months, down 9.3%
from the same period of last year, and falling behind Shanxi by 5.93%,
or 26.79mt. Output from major mines rose to 425.14mt, up 18.8%
year-on-year, while production of private and local state-owned mines
plunged to 26.32mt, down 79.4% from 127.49mt in H1 last year.
The region produced 73.98mt in June, down from 74.74mt in
May, and down 1.0% year-on-year. Key state-owned mines produced
69.02mt, which is down from 69.92mt in May, but up significantly
from 49.53mt in June last year.
Output of private and local state-owned mines remained low at
4.92mt, although up from 4.82mt in May. However, this is equivalent to
just one quarter of the 17.42mt produced in the same period of last year.
Shaanxi, the third largest coal producing region, mined 211.32mt
in the six-month period, down 12.38mt, or 5.54%, from H1 last year.
Key state-owned mines produced 63.73mt, down slightly from
64.55mt in the first six months of last year. Local mines produced
90.16mt, down 13.94mt, or 13.4%, year-on-year.
The province produced 42.89mt in June, after witnessing a strong
production of 43.07mt for May. The figure was down 12.38mt, or
5.54%, compared with June 2013.
Shenhua Energy, the listed subsidiary of Shenhua Group, saw its
output weaken slightly to 155mt in H1, down 2.1% year-on-year.
Production in June was 25.7mt, up slightly from 25.2mt in the
previous month, but down 2.7% from June last year.
The companys sales dropped 3.3% year-on-year to 234.6mt in H1, but
its June performance jumped to 47.8mt, soaring 25.8% from 38mt in
May, and up 5.5% year-on-year. This was the first increase in the past five
months, contributing to the companys heavy price cuts since June 24.
China Coal Energy, the listed arm under the countrys second largest
Production & Stocks > Transportation

Inner Mongolia production (mt)
Stocks at Chinas major power plants (mt)
120
85
110
80
100
75
90
80
70
70
65
60
Jul 10
Jun 20
May 31
Apr 20
May 10
Mar 31
Mar 10
Jan 31
Feb 20
Jan 10
Dec 20
Nov 30
Oct 20
Nov 10
Sep 30
Sep 10
Aug 20
Jul 31
Jul 10
24
22
20
18
16
14
Jul 14
Jun 1
Jun 22
May 12
Apr 20
Mar 9
Mar 30
Feb 17
Jan 27
Jan 5
Dec 15
Nov 25
Nov 4
12
Oct 14
since mid-July, as power groups buying interest picked up after the

steep domestic price cuts of July.
Inventories at the four coal loading ports in north China, including
Qinhuangdao, Caofeidian, Jingtang and Tianjin, dropped to 21.24mt
on July 27, down 0.7mt from 21.94mt on July 14.
Stocks at Qinhuangdao port fell to 7.09mt on July 28, down from
their latest peak of 7.4mt on July 22, while the tonnage at Huanghua
port shrank more rapidly to 1.63mt on July 28, down 0.97mt, or
37.3%, from 2.6mt on June 26. The vessel queue at Huanghua was 43
on July 21, up 17 from 26 vessels a week ago.
The sliding stock levels at ports are understood to be mainly
caused by Shenhua s six recent price cuts, which reduced its prices
of 5,500kc NAR materials to RMB485/t ($78.86/t) on July 22, from
RMB530/t ($86.18/t) before June 26.
Stocks at four major northern ports (mt)
Sep 22
Coal stocks at major ports in northern China begun to decrease
Sep 2
Inventories at Chinas
portsstart to fall
An expectation of rising consumption has also encouraged power

plants to stock more, with coal burn of the major six major power
groups, including Huaneng, Guodian, Datang, Yudean, Shanghai
Electric Power, and Zheneng Electric Power, rising to 0.68mt/day
during July 18-24, up from 0.61mt/day in early July.
Stocks at power plants saw the tonnage at the big six generators
dropping to 13.2mt on July 24, down 0.74mt or 7.2% from 13.94mt on
July 1. This figure is enough for 19 days of consumption, versus the 23
days witnessed early in the month.
Aug 12
producer China National Coal Group, produced 60.48mt in H1, up 2.8%

year-on-year. Its production in June stood at 10.4mt, similar to the
10.36mt it recorded in May, but this was a jump of 11.3% from June 2013.
The companys sales came to 75.13mt, climbing 0.1% years-on-year.
The tonnage in June was 13.68mt, declining 7.4% from 14.78mt in the
previous month, but growing 3.6% year-on-year.
Source: CCM
Jul 22
Source: CCM
Jul 1
Jun 14
May 14
Apr 14
Mar 14
Feb 14
Jan 14
Dec 13
Nov 13
Oct 13
Sep 13
Aug 13
Jul 13
60
Jun 13
50
Source: CCM
Transportation
China Power Investment

tobuild railway
China Power Investment, a major power generator in China, is to
build the second rail track from the Baiyinhua coal mine to Jinzhou
port, in order to facilitate coal deliveries from its coal mines in
eastern Inner Mongolia.
The planned railway will be 565km long, with total costs
estimated at RMB25.66bn ($4.17bn), of which 35% is to be funded
by China Power Investment and other joint investors, and the
remainder will be sourced from banks.
Construction on the railway is expected to take four years, with

commissioning estimated for 2018-2019.
Currently, the railway from Baiyinhua to Jinzhou comprises two
parts, both constructed by China Power Investment.
The first part from Baiyinhua to Chifeng is 331km long and was
completed in 2009, with a capacity at 20mt/yr. The railway is to
deliver 17mt this year, after railing 14mt last year.
The section from Chifeng to Jinzhou port is 282km long
and was commissioned in 2010. The railway is still being
constructed,with commissioning scheduled in 2015. The
railway, at total costs of RMB7.15bn ($1.16bn), will be capable of
delivering60mt/yr.
mccloskeycoal.com
Transportation > Others
Chinas rail and port handling

improves in June
and shipments climbed on a daily
basis in June, on the back of rising demand because of higher
temperatures and industrial growth, although monthly figures
continued to be low.
Total coal deliveries by railways came to 185.4mt in the month,
down from 188.73mt in May, but the daily average figure stood at
6.18mt/day, up 1.48% from 6.09mt/day in May, according to the
China Railway Corporation.
Chinas coal railings
Chinas port handling by month (mt)

69
63
57
51
Jun 14
May 14
Apr 14
Mar 14
Feb 14
Jan 14
Dec 13
Nov 13
Oct 13
Sep 13
Aug 13
Jul 13
Jun 13
45
Source: CCM
YTD coal railings amounted to 1.15bn, edging up 0.7% year-on-year.

The Daqin line transported 38.94mt in June, down from
40.61mt in May, and its daily deliveries dipped as well, from
1.31mt in May to 1.30mt in June.
But the Houyue line delivered 15.9mt, up from 15.46mt in May. For
the YTD, Daqin delivered 224.84mt, rising 2.3% from H1 last year,
and the Houyue line railed 92.23mt, up 2%.
Deliveries by Chinas railways (mt)
215
210
205
200
195
190
185
180
Jun 14
May 14
Apr 14
Mar 14
Feb 14
Jan 14
Dec 13
Nov 13
Oct 13
Sep 13
Aug 13
Jul 13
170
Jun 13
175
Source: CCM
A similar scenario was seen with the port figure, with total
shipments standing at 57.25mt in June, down 1.92% from 58.37mt
in the previous month. However, the daily tonnage averaged at
mccloskeycoal.com
1.91mt/day, up 1.6% from 1.88mt in May.

Qinhuangdao handled 18.53mt in the month, falling 4.8%
month-on-month, but rising 0.3% year-on-year, and Huanghua
port shipped 11.69mt, dropping 5% from May.
Total YTD shipments were 339.32mt, up 7.3% from the same
period of last year. Qinhuangdao delivered 115.87mt, flat to H1 2013,
and Huanghua shipped 67.87mt, rising 8.5%.
Others
Yitai to build coal

liquefactionin Xinjiang
Inner Mongolia-based coal producer Yitai Group has
won the go-ahead for a coal-to-oil plant in Xinjiang, with
approval handedout by the National Development and Reform
Commission in mid-July.
The planned project will be built in Yitais industrial park at
Kazak autonomous prefecture in Xinjiangs Yili, with capacity
at 1.02mt/yr. Total costs are estimated at RMB19bn ($3.09bn), of
which 30% will be funded by Yitai, and the remaining 70% will be
financed by bank loans.
The company is inviting bids for required equipment currently,
with construction expected to start soon. Commissioning may come
in around 2019. The capacity may expand to 5.4mt/yr later, with total
spending at RMB78bn ($12.69bn), the company said.
Yitai is running a 0.16mt/yr demonstration project in Inner
Mongolia utilising indirect coal-to-oil technology. Production was
0.18mt in 2013.
The company also won approval for another 2mt/yr plant in Inner
Mongolias Ordos in December last year.
Chinas gas demand increases

Chinas natural gas consumption stood at 88.7bn m3 in the
first half of 2014, growing 8.9% from the same period of last year,
says the National Development and Reform Commission (NDRC).
The rate in Q2 was 9.4%, accelerating from Q1s 8.4%, based on the
same statistics.
The countrys natural gas production amounted to 63.2bn m3 in
H1, climbing 7.5% y-o-y, while imports were 28.3bn m3, up 14.4%.
Oil retailing giant Sinopecs oil and gas production was 237.01
million barrels of oil equivalent in H1, growing 8% year-on-year. This
included 177.88 million barrels of crude oil, up 7.52%, and 354.8bn
cubic feet of gas, growing 9.46%.
For mid-term demand, it is understood that China has entered a
golden age for natural gas, after the country enhanced its stance to
reduce pollution, with gas emerging as a major part of the solution,
according to the International Energy Agency (IEA).
Chinas gas demand is expected to reach 315bn m3/yr by 2019,
an increase of 90% from the current level. This is compared to the
overall global demand, which may climb by merely 2.2%/yr over the
forecast period, the IEA said.
Chinese production is projected to growth by 65%, from 117bn m3
in 2013 to 193bn m3/yr by 2019, most of which will be unconventional
gas. This will help meet some 50% of the newly increased demand,
with China to remain a major importer.
Others > Companies
Third round of Chinese shale

gas auction planned
The third round of shale gas resource auctions are being prepared
in China, although the Ministry of Land and Resources (MLR) may
no longer be the sponsor, according to an insider close to the issue.
Provincial governments will be allowed to hold auction events
independently, needing only to report the auctioned blocks to
the ministry.
It is understood that a number of provinces have already started
making relative plans for the work, with Hubei preparing to auction
five blocks this year. Guizhou has also reported similar plans.
China has so far pumped more than RMB15bn ($2.44bn) into shale
gas development, with 322 wells drilled by the end of April this year,
mainly in the Sichuan Basin and some neighboring areas.
This has seen three companies - Sinopec, PetroChina, and
Yanchang Petroleum - achieving production, at a combined capacity
of 1.4bn m3/yr, the Ministry of Land and Resources has said.
PetroChina has drilled 50 wells at Sichuans ChangningWeiyuan block and Yunnans Zhaotong block, of which 10 wells
were commissioned, producing a total of 79.22 million m3 so far.
PetroChina wants to increase the capacity to 2.6bn m3/yr by 2015.
Sinopec has drilled 23 wells in Sichuan, Chongqing and Guizhou, and
produced 300 million m3 by end-April. This years production is expected
to top 1bn m3/yr, and the figure could stand at 5bn m3/yr by 2015.
Yanchang Petroleum had finished 39 wells as of the end of 2013,
with capacity totaling 11 million m3/day.
China has planned to produce 6.5bn m3/yr of shale gas by 2015, and
further increase the output to 60-100bn m3/yr by 2020, compared
with 200m m3 in 2013.
The country has so far launched two rounds of auctions with 21 gas
blocks offered. However, drilling of shale gas wells has been slow, due
to technical and financing issues.
Mongolia looks
to export gasto China
Mongolia looks likely to ink a preliminary agreement with
Sinopec on the construction of coal gasification facilities during
Chinese President Xi Jinpings visit to the county in August,
Chuluunbat Ochirbat, vice minister of Mongolias Ministry of
Economic Development, said.
This is after a MoU for the project was inked between Mongolias
Ministry of Mining and Sinopec in October 2013.
As per plans, the project, at the cost of $30bn, will see the
construction of four plants to produce a combined 16bn m3/yr of gas,
consuming 50-80mt/yr of thermal coal produced in Mongolia.
Commissioning is scheduled by 2019, with roughly 95% of the
production to be supplied to China, Vice Minister for Mining
Erdenebulgan Oyun said earlier.
China faces LNG oversupply

Chinas LNG sector is facing up to the potential of a severe
oversupply situation, with LNG production capacity totaling 51.3m

m3/day as of the end of June, up 33% from the end of 2013.
LNG imports have also climbed, by roughly 21% year-on-year in the

first five months of 2014, according to industrial sources.
However, demand in the downstream sector has slid, due to the
price competiveness for LNG. Roughly 47% of LNG in China is used
as fuel for vehicles.
In the major consuming province of Guangdong, YTD LNG station
launches stand below 10, much lower than previous market expectation.
The source also expects that some 40.94 million m 3/day of
additional capacity may launch within this year, increasing
the capacity to nearly 100 million m 3/day, which will further
aggravate the oversupply situation.
Chinese energy
structurechanging
Chinas energy consumption structure saw a mild change in
2013, following efforts by the authorities in limiting coal use
and protect the environment, the BP Statistical Review of World
Energy 2014 has indicated.
Chinas coal consumption stood at 1.93bn tonnes of oil equivalent
last year, up 3.7% from the previous year. This accounted for 67.5%
of Chinas overall energy consumption, with the proportion falling
from 67.8% in 2012, and hitting its lowest recorded level.
Oil consumption went up 3.5% to 507.4mt of oil equivalent, which
was 17.8% of the total. The proportion has also narrowed from 17.95%
in 2012, and stood at the lowest since 1991.
By contrast, natural gas consumption, which climbed 10.5% to
145.5mt of oil equivalent in 2013, weighed 5.1% of the total, doubling
the level of a decade ago. Other non-fossil energies, including
nuclear, hydro power and renewable energies, jointly shared 9.6% of
the total, compared to 9.3% in 2012.
Chinas overall primary energy consumption amounted to 2.85bn
tonnes of oil equivalent last year, growing 4.7% year-on-year.
This makes the country the top energy consumer in the world,
accounting for 22.4% of the global total. Imports have met 15% of
Chinas energy demand last year, with the rate for oil approaching
60%, while for natural gas it was 30%.
Global energy demand was 12.73bn tonnes of oil equivalent, which
was a rise of 2.3%. The growth rate accelerated from 1.8% in 2012, but
has slowed from the 10-year average of 2.5%.
Companies
Shenhua wins green

light for Oz mine
Shenhua recently received the go ahead from the National
Development and Reform Commission (NDRC) for its Watermark
coal project in New South Wales, Australia. The project still needs
environmental approval from the Australian government.
The Watermark project, occupying an area of 195km2, with resources
at 290mt, is located approximately 25km south-east of Gunnedah and
is approximately 282 km by rail from the Port of Newcastle.
Construction will include a 10mt/yr open-cut coal mine for an
operation period of 25 years, and an ancillary coal handling and
preparation plant to process the raw coal, according to plans.
mccloskeycoal.com
Companies
Shenhua drills shale gas wells

Shenhua Group has reported progress in its shale gas
development, with drilling work started at the Baoye No. 2 well
at Hunan Baojing block on June 3, and at the Baoye No. 1 well on
July 2, according to the company.
Shenhua took control of the Baojing block during the second shale gas
resource auction held by the Ministry of Land and Resources in 2012;

however, progress had been limited because of a lack of experience.
The company has consequently joined up with companies with
related experience. In March 2013, an agreement was signed with
Norway-based Statoil, while at end-2013, Shenhua also inked a deal
with the US-based Energy Corporation of America (ECA) to extract
shale gas in Greene county, Pennsylvania.
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mccloskeycoal.com
Ports
Ports
Raw coal output (000t)

Jun. 2014
Jun. 2013
% Change
YTD 2014
YTD 2013
Inner Mongolia
73,980
66,940
11%
451,460
453,120
Shanxi
91,536
87,031
5%
478,246
468,612
2%
42,886
46,300
-7%
211,320
223,704
-6%
208,402
200,271
4%
1,141,026
1,145,436
Shaanxi
Total
Stocks of port (mt)
% Change
Stocks by producer (mt)

23-Jun
30-Jun
7-Jul
14-Jul
Jun. 2014
Jun. 2013
Guangzhou
3.21
3.11
3.20
3.16
Producer stocks
99.00
89.90
10%
Caofeidian
5.36
5.90
6.44
6.52
Key state owned
58.30
47.92
22%
Total
157.30
137.82
14%
Jingtang
4.52
4.70
4.98
4.70
Tianjin
5.23
5.50
5.51
5.05
Fangchenggang
5.87
5.80
5.66
5.70
Qinhuangdao
7.16
7.47
7.11
7.31
31.35
32.48
32.91
32.43
Total
% Change
Coal consumption of major power plants (mt/day)

30-Jun
10-Jul
20-Jul
3.34
3.25
Coal consumption
Coal stocks at major power plants (mt)
Stocks of port (mt) - July 2014

8.00
North China Grid
Jun. 2014
Jun. 2013
Change
20.06
21.39
-1.33
5.23
4.63
0.60
7.00
Northeast China Grid
6.00
East China Grid
15.19
14.24
0.95
Central China Grid
20.49
17.41
3.08
5.00
6.27
6.16
0.11
4.00
Northwestern China Grid

China Southern Power Grid
11.82
10.15
1.67
3.00
Total
79.06
73.98
5.08
2.00
International seaborne freights ($/t)
1.00
Route
23-Jun
30-Jun
7-Jul
0.00
Indonesia-South China Pmax
5.00
4.90
5.40
5.50
Russia-South China
Pmax
9.00
9.00
9.00
9.00
Australia-South China
Cape
10.50
10.00
10.50
10.00
23-Jun
Guangzhou
Tianjin
30-Jun
7-Jul
14-Jul
Caofeidian
Jingtang
Fangchenggang
Qinhuangdao
Vessel
14-Jul
Shipments of major ports (mt)

Port
Jun. 2014
Jun. 2013
% Change
YTD 2014
YTD 2013
Qinhuangdao
18.61
18.65
115.87
115.85
Huanghua
11.69
10.42
12%
67.87
62.53
9%
Caofeidian
%change
6.10
5.40
13%
38.87
35.37
10%
Others
20.85
17.99
16%
116.70
102.37
14%
Total
57.25
52.45
9%
339.32
316.12
7%
Change
Deliveries of state-owned railways (mt)

Jun. 2014
Jun. 2013
Change
YTD 2014
YTD 2013
Daqin railway
38.94
37.05
1.89
224.84
219.89
4.95
Houyue railway
15.90
7.50
8.41
92.23
44.50
47.74
Total
54.84
44.55
10.30
317.07
264.39
52.69

Route
Vessel type
20-Jun
27-Jun
4-Jul
11-Jul
Qinhuangdao-Shanghai
40,000-50,000DWT
21.0
20.9
20.9
20.9
Qinhuangdao-Ningbo
15,000-20,000DWT
25.3
25.2
25.1
25.1
Qinhuangdao-Guangzhou
50,000-60,000DW
30.3
30.3
30.3
30.4
Huanghua-Shanghai
30,000-40,000DWT
23.4
23.3
23.2
23.3
mccloskeycoal.com
Imports
Imports
Imports by country (000t)

May. 2014
May. 2013
% Change
YTD 2014
YTD 2013
Indonesia
7,569
10,133
-25%
53,095
56,120
% Change
-5%
Australia
7,914
6,944
14%
37,898
33,436
13%
Russia
2,688
2,778
-3%
12,251
11,101
10%
Mongolia
1,930
1,417
36%
7,545
6,341
19%
North Korea
1,312
1,721
-24%
6,045
6,702
-10%
South Africa
618
841
-27%
5,239
4,948
6%
Vietnam
461
1,258
-63%
4,425
6,910
-36%
Canada
501
979
-49%
3,003
5,188
-42%
USA
591
1,106
-47%
2,534
3,741
-32%
Philippines
384
49
688%
2,293
602
281%
Other
43
339
-87%
801
1,148
-30%
Total
24,012
27,566
-13%
135,129
136,237
-1%
YTD 2013
% Change
Imports by type (000t)

May. 2014
May. 2013
% Change
YTD 2014
Anthracite
North Korea
1,312
1,721
-24%
6,042
6,702
-10%
Vietnam
461
1,258
-63%
4,424
6,907
-36%
Russia
547
624
-12%
2,360
2,427
-3%
Australia
149
151
-2%
1,505
1,268
19%
Other
134
-98%
290
212
37%
Total
2,471
3,888
-36%
14,622
17,517
-17%
Coking Coal
Australia
2,959
2,162
37%
12,565
12,125
4%
Mongolia
1,578
1,248
27%
5,662
5,280
7%
Russia
523
811
-36%
2,690
3,456
-22%
Canada
407
979
-58%
2,397
4,824
-50%
Other
414
1,295
-68%
2,008
4,944
-59%
Total
5,882
6,495
-9%
25,321
30,629
-17%
Australia
4,806
4,232
14%
23,426
18,706
25%
Indonesia
1,880
3,214
-42%
13,925
16,439
-15%
Russia
145%
Steam Coal
1,414
660
114%
5,461
2,229
South Africa
618
841
-27%
5,000
4,948
1%
Other
480
459
5%
3,291
2,004
64%
Total
9,198
9,406
-2%
51,103
44,326
15%
Brown Coal
4,349
4,310
1%
28,549
25,065
14%
Philippines
Indonesia
329
49
575%
1,873
602
211%
USA
0.02
0.1
-67%
165
0.4
40
40
58
-30%
Malaysia
Other
0.2
-97%
44
41
8%
Total
4,719
4,365
8%
30,672
25,766
19%
Other Coal
Indonesia
1,188
2,293
-48%
10,347
13,022
-21%
Russia
204
684
-70%
1,734
2,989
-42%
Mongolia
201
11
1657%
407
310
31%
Australia
399
-100%
402
1,337
-70%
Other
149
24
516%
521
341
53%
Total
1,743
3,412
-49%
13,411
17,999
-25%
24,012
27,566
-13%
135,129
136,237
-1%
Grand Total
mccloskeycoal.com
Imports
Imports by region (000t)

May. 2014
May. 2013
% Change
YTD 2014
YTD 2013
Guangdong
3,255
5,305
-39%
23,240
25,498
% Change
-9%
Fujian
3,447
3,142
10%
17,777
15,319
16%
10%
Guangxi
2,648
3,094
-14%
14,856
13,553
Jiangsu
2,068
2,105
-2%
13,785
12,060
14%
Shandong
2,231
1,736
29%
13,461
10,603
27%
Other
10,364
12,184
-15%
52,009
59,203
-12%
Total
24,012
27,566
-13%
135,129
136,237
-1%
Imports by region and type (000t)

May. 2014
May. 2013
% Change
YTD 2014
YTD 2013
% Change
226%
Anthracite
Shandong
656
189
246%
3,039
933
Guangxi
198
526
-62%
2,371
3,138
-24%
Guangdong
236
611
-61%
2,370
3,213
-26%
Hebei
550
686
-20%
2,360
2,229
6%
Other
832
1,876
-56%
4,482
8,003
-44%
Total
2,471
3,888
-36%
14,622
17,517
-17%
-6%
Coking Coal
Hebei
1,308
1,874
-30%
6,166
6,576
Inner Mongolia
1,619
1,248
30%
5,703
5,557
3%
214
482
-56%
2,683
3,644
-26%
-26%
Shandong
Liaoning
738
580
27%
2,407
3,260
Other
2,002
2,311
-13%
8,362
11,591
-28%
Total
5,882
6,495
-9%
25,321
30,629
-17%
Steam Coal
Guangdong
1299
1,457
-11%
8334
7,315
14%
Guangxi
1364
1,394
-2%
7869
5,702
38%
Fujian
1428
1,202
19%
6598
6,578
502
1,845
-73%
5517
5,908
-7%
zhejiang
Other
4605
3,507
31%
22785
18,824
21%
Total
9,198
9,406
-2%
51,103
44,326
15%
Guangdong
1,553
1,906
-19%
9944
9,019
10%
Fujian
1,283
1,241
3%
7266
6,021
21%
Jiangsu
451
365
24%
4145
3,933
5%
Shanghai
458
367
25%
3419
2,309
48%
Brown Coal
Other
975
486
5897
4,484
32%
Total
4,719
4,365
8%
30,672
25,766
19%
Other Coal
Fujian
0.001
507
3054
1,943
57%
Guangdong
142
1,276
-89%
2150
5,610
-62%
Jiangsu
127
166
-24%
1636
1,526
7%
83
89
-7%
1293
1,383
-7%
Shandong
Other
866
1,374
-37%
5277
7,536
-30%
Total
1,217
3,412
-64%
13,411
17,999
-25%
23,487
27,566
-15%
135,129
136,237
-1%
Grand Total
mccloskeycoal.com
Imports
Imports by company (000t)

May. 2014
May. 2013
% Change
YTD 2014
YTD 2013
Guangdong Power Industry Fuel Co., LTD
742
429
73%
4,481
2,197
104%
China Huaneng Fuel Co.,LTD.
602
166
263%
4,120
424
873%
Tianjin Tewoo Group CO.,LTD.
686
723
-5%
3,962
2,637
50%
CNBM International
607
698
-13%
3,059
4,143
-26%
28%
Rizhao Honglu Power Energy
% Change
581
573
1%
3,049
2,381
Other
20,794
24,977
-17%
116,458
124,455
-6%
Grand Total
24,012
27,566
-13%
135,129
136,237
-1%
Imports by quality (000t)
Coal imports (000t) - May 2014
16000
7%
14000
12000
'000t
10000
38%
23%
8000
Steam coal
Coking coal
6000
Anthracite
4000
Brown coal
2000
Other coal
10%
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Steam
Anthracite
25%
Coking
Imports by region (000t) - May 2014
Imports by country (000t) - May 2014

2%
3%
14%
14%
Fujian
Guangxi
Indonesia
Australia
5%
Guangdong
43%
2%
0%
2%2%
Russia
32%
8%
North Korea
South Africa
Jiangsu
Vietnam
Shandong
11%
Other
Mongolia
11%
Canada
USA
9%
mccloskeycoal.com
Philippines
9%
33%
Other
Exports
Exports
Exports by country (000t)

May. 2014
May. 2013
% Change
YTD 2014
YTD 2013
South Korea
240
224
7%
1,256
1,409
-11%
Japan
152
279
-46%
1,163
1,352
-14%
Taiwan
75
198
-62%
199
448
-55%
North Korea
11
14
-23%
39
81
-52%
0.2
-74%
37
0.02
Burma
Malaysia
% Change
Saudi Arabia
0.3
0.1
160%
0.4
-34%
HK
0.3
0.1
275%
0.3
0.3
-12%
0.04
0.1
0.05
67%
Other
0.1
-82%
0.5
-83%
Total
481
718
-33%
2,696
3,294
-18%
YTD 2014
YTD 2013
% Change
Thailand
Exports by type (000t)

May. 2014
May. 2013
% Change
Anthracite
South Korea
84
150
-44%
576
755
-24%
Japan
84
60
38%
460
478
-4%
Burma
0.2
-74%
37
Malaysia
0.02
Other
-11%
-68%
Total
170
213
-20%
1,076
1,239
-13%
86
168
171
-2%
145
102
297
-66%
Coking Coal
South Korea
Japan
North Korea
11
14
-23%
38
80
-53%
0.01
0.01
Other
0.01
Total
97
159
-39%
308
548
-44%
Japan
69
74
-7%
601
577
4%
South Korea
70
74
-6%
511
482
6%
USA
Steam Coal
Taiwan
75
198
-62%
199
448
-55%
0.2
0.2
-10%
0.4
54%
Other
0.0002
Total
214
347
-38%
1,312
1,507
-13%
North Korea
Other Coal
Russia
1500
Total
1,500
481
718
-33%
4,196
3,294
27%
Grand Total
Exports by company (000t)

May. 2014
May. 2013
% Change
YTD 2014
YTD 2013
China Coal
177
205
-14%
930
955
-3%
Shenhua
113
235
-52%
802
999
-20%
57
32
75%
249
524
-52%
11
123
57
116%
Other
134
235
-43%
592
760
-22%
Grand Total
481
718
-33%
2,696
3,294
-18%
Shanxi
Minmetals
% Change
mccloskeycoal.com
Exports
Chinas coal exports (000t)
Shenhua exports (000t)

1200
700
600
1000
800
400
'000t
000t
500
300
400
200
200
100
0
600
Jan
Feb Mar
2011
Apr May Jun
2012
Jul
2013
Aug Sep Oct Nov Dec

2014
Jan Feb Mar Apr May Jun

2011
Linear (2011)
Shanxi exports (000t)
Jul Aug Sep Oct Nov Dec

2013
2012
2014
Minmetal exports (000t)
400
160
140
120
300
'000t
'000t
100
200
80
60
40
100
20
0
0
Jan
Feb Mar
Apr May Jun
2011
Jul
2013
2012
2500
500
2000
400
'000t
600
1500
200
500
100
0
mccloskeycoal.com
Jul
Aug Sep Oct Nov Dec

2013
2012
2014
300
1000
2011
Apr May Jun
Total anthracite exports (000t)
3000
Feb Mar
2011
2014
Total exports (000t)
'000t
Jan
Aug Sep Oct Nov Dec
2012
Jul
Aug Sep Oct Nov Dec

2013
2014

2011
2012
Jul
Aug Sep Oct Nov Dec

2013
2014
Exports > Coke

Total coking exports (000t)
Total steam exports (000t)

1400
1000
900
1200
800
1000
600
800
'000t
'000t
700
500
400
600
300
400
200
200
100
0

2011
Jul
2013
2012
Aug Sep Oct Nov Dec

2014

2011
2012
Jul
Aug Sep Oct Nov Dec

2013
2014
Coke
Coke exports by country (000t)

May. 2014
May. 2013
% Change
YTD 2014
YTD 2013
India
474
253
87%
1,102
405
% Change
172%
Japan
146
15
907%
929
98
848%
Brazil
116%
165
73
127%
386
179
Iran
44
262
Vietnam
43
13
224%
177
21
752%
South Africa
46
24
90%
135
55
146%
South Korea
18
24
-25%
122
106
15%
Indonesia
30
1261%
79
798%
Netherland
0.2
56
0.2
Mexico
55
Other
31
12
147%
103
99
4%
Total
997
417
139%
3,406
973
250%
Coke imports (000t)

May.
2014
0.04
0.002
1909%
0.1
35
'000t
Total
Coke production (000t)

May. % Change YTD 2014 YTD 2013 % Change
2013
44000
42000
40000
38000
36000
34000
32000
30000
28000
26000
24000
22000
20000

2011
2012
Jul Aug Sep Oct Nov Dec

2013
2014
mccloskeycoal.com
Coke
Coke production by region (000t)

Jun. 2014
Jun. 2013
% Change
YTD 2014
YTD 2013
Beijing
% Change
-
Tianjin
19
23
-17%
114
133
-14%
Hebei
489
560
-13%
2,921
3,481
-16%
Shanxi
763
800
-5%
4,299
4,486
-4%
Innter Mongolia
288
249
15%
1,620
1,471
10%
Liaoning
182
177
3%
1,100
1,075
2%
Jilin
49
69
-29%
228
261
-13%
Heilongjiang
70
61
13%
392
413
-5%
213
186
15%
1,151
1,095
5%
-1%
Shanghai
jiangsu
Zhejiang
25
25
-3%
148
149
Anhui
73
77
-6%
444
441
1%
Fujian
21
14
48%
107
80
34%
69
73
-5%
416
414
Shandong
Jiangxi
379
373
2%
2,253
2,134
6%
Henan
257
216
19%
1,527
1,353
13%
Hubei
77
78
-1%
472
455
4%
Hunan
55
53
3%
327
322
1%
53
42
26%
296
257
15%
-26%
Guangdong
Guangxi
Chongqing
25
30
-17%
132
179
Sichuan
118
108
9%
691
743
-7%
Guizhou
61
80
-24%
366
408
-10%
Yunnan
125
150
-17%
761
813
-7%
Shaanxi
376
315
20%
1,703
1,708
48
37
30%
267
188
43%
Gansu
Qinghai
16
-52%
79
123
-36%
Ningxia
65
59
10%
374
316
18%
Xinjiang
148
178
-17%
869
775
12%
4,109
4,105
23,392
23,659
-1%
Total
mccloskeycoal.com
Steel
Source: Xinhua InfoLink
Steel
Crude steel production by region (000t)

Jun. 2014
Jun. 2013
% Change
YTD 2014
YTD 2013
% Change
Beijing
0.2
0.2
-15%
-13%
Tianjin
185
188
-1%
1,133
1,179
-4%
Hebei
1,547
1,554
9,840
10,335
-5%
Shanxi
406
416
-2%
2,254
2,208
2%
Innter Mongolia
145
181
-20%
827
992
-17%
Liaoning
12%
545
508
7%
3,229
2,888
Jilin
98
114
-14%
594
588
1%
Heilongjiang
44
57
-23%
290
342
-15%
Shanghai
152
155
-2%
926
950
-2%
jiangsu
841
682
23%
4,792
4,120
16%
25%
Zhejiang
149
114
31%
851
683
Anhui
209
193
9%
1,177
1,129
4%
Fujian
154
107
44%
897
678
32%
Jiangxi
187
178
5%
1,065
1,023
4%
Shandong
531
493
8%
3,188
3,046
5%
Henan
244
233
5%
1,453
1,329
9%
Hubei
255
226
13%
1,508
1,341
12%
Hunan
163
156
4%
942
831
13%
Guangdong
139
120
16%
822
676
22%
Guangxi
162
126
28%
939
791
19%
10
71
55
29%
376
316
19%
Sichuan
182
149
22%
1,103
888
24%
Guizhou
52
39
34%
294
225
31%
Yunnan
152
158
-4%
924
918
1%
Shaanxi
99
80
24%
508
474
7%
Gansu
92
79
17%
522
430
21%
Qinghai
14
10
39%
69
73
-5%
Ningxia
16
344%
74
16
354%
Hainan
Chongqing
Xinjiang
Total
93
91
2%
581
518
12%
6,929
6,466
7%
41,191
38,987
6%
mccloskeycoal.com
Iron > Power

Source: Xinhua InfoLink
Iron
Pig iron production by region (000t)

Jun. 2014
Jun. 2013
% Change
YTD 2014
YTD 2013
Beijing
Tianjin
179
183
-3%
1,081
1,131
-4%
Hebei
1,397
1,374
2%
9,121
9,575
-5%
389
400
-3%
2,127
2,179
-2%
96
113
-16%
594
674
-12%
513
480
7%
3,089
2,865
8%
83
88
-6%
529
498
6%
-16%
Shanxi
Innter Mongolia
Liaoning
Jilin
Heilongjiang
% Change
43
54
-22%
282
337
Shanghai
143
143
855
859
jiangsu
621
562
10%
3,526
3,259
8%
11%
Zhejiang
99
86
15%
580
523
Anhui
171
161
6%
974
983
-1%
Fujian
67
39
71%
412
287
43%
Jiangxi
170
167
2%
982
969
1%
Shandong
554
514
8%
3,308
3,073
8%
Henan
229
208
10%
1,366
1,219
12%
Hubei
207
197
5%
1,223
1,165
5%
Hunan
152
160
-5%
882
842
5%
84
94
-10%
550
560
-2%
106
122
-14%
603
759
-21%
41
50
-18%
212
293
-28%
Sichuan
168
153
10%
1,024
904
13%
Guizhou
45
40
13%
271
246
10%
1%
Guangdong
Guangxi
Hainan
Chongqing
Yunnan
160
166
-4%
948
943
Shaanxi
83
75
10%
458
458
Gansu
77
75
1%
437
409
7%
Qinghai
13
10
29%
62
70
-12%
Ningxia
18
13
44%
87
60
45%
Xinjiang
96
108
-12%
618
612
1%
6,001
5,834
3%
36,202
35,754
1%
Total
Power
The national power generation (100GWh)

Jun. 2014
Jun. 2013
% Change
YTD 2014
YTD 2013
% Change
87.46
81.48
7%
371.30
329.10
13%
346.06
324.01
7%
2,099.49
1,995.51
5%
Other
24.55
19.77
24%
145.54
109.55
33%
Total
458.07
425.26
8%
2,616.33
2,434.16
7%
Hydro power
Coal-fired power
mccloskeycoal.com

China Coal Monthly Issue 126 - 168336110913052132

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China Coal Monthly Issue 126 - 168336110913052132

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IHS energy

China Coal Monthly

Domestic Chinese prices set

IhS McCloskey/xinhua Infolink Chinese markers

It is understood that the proposed cuts,

Note: FOB prices inclusive of domestic taxes

South China CFR marker ($/t)

Note: CFR prices exclusive of Chinese taxes

Coking coal price in Shanxi

Note: 1. FOR prices inclusive of domestic taxes

Coking coal price in hebei

Note: 1. CIF prices inclusive of domestic taxes

Coke price in hebei

Note: ash 13%, volatiles 1.2%, sulphur0.75%

Coke price in Shanxi (RMB/t)

Note: ash 13, sulphur0.75, volatiles1.2

Coal imports (000t)

yTD 2013 % Change

2014 IHS July 2014

China Coal Monthly | 1

Domestic Chinese prices

China to accelerate infrastructure building

China tightens control over coal conversion

Offshore wind farm growth

Chinese steel prices remainat low levels

pRODuCTION & STOCkS

Chinas H1 coal productionfalls

Imports by country (000t)

China Power Investment tobuild railway

Yitai to build coal liquefactionin Xinjiang

Shenhua wins green light for Oz mine

Exports by country (000t)

Coke exports by country (000t)

Chinese met prices edgedown further

Power output climbs in June

Raw coal output (000t)

Crude steel production by region (000t)

Pig iron production by region (000t)

The national power generation (100GWh)

IHS China Coal Monthly

Data Content Manager

2 | China Coal Monthly

All editorial enquiries

Design and Layout

CIF Guangzhou, basis 5,500kc NAR (RMB/t)

FOB prices at Qinhuangdao, basis 5,500kc NAR ($/t)

FOB prices at Qinhuangdao ($/t)

Basis 5,800kc NAR

Basis 5,500kc NAR

Basis 5,000kc NAR

Qinhuangdao stockpiles (mt)

Domestic seaborne freights (RMB/t)

FOR prices at Shanxi ($/t)

Basis 5,800kc NAR

Basis 5,500kc NAR

Basis 5,000kc NAR

Shenhuas term coal prices

QHD-Shanghai in 40,000-50,000t vessels

2014 IHS July 2014 China Coal Monthly | 3

Chinese Import settlements

Imports expand in June

South China CFR Marker for imported materials ($/t)

dramatically dampened new deals into China, with traders having

6 | China Coal Monthly July 2014 2014 IHS

8 | China Coal Monthly July 2014 2014 IHS

10 | China Coal Monthly July 2014 2014 IHS