Shenhua to usher in Chinese coal cuts

CHINA Shenhua Energy, the world’s biggest thermal coal producer, is expected to cut production by almost 11% in 2015 as the Chinese government tries to support fragile domestic coal prices.
Shenhua to usher in Chinese coal cuts Shenhua to usher in Chinese coal cuts Shenhua to usher in Chinese coal cuts Shenhua to usher in Chinese coal cuts Shenhua to usher in Chinese coal cuts

 

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McCloskey China Coal Daily reported that Shenhua aimed to cut saleable production by 10.8% to 273 million tonnes, well down on the 307Mt clocked up in 2014 when output was 3.6% lower year-on-year.

Shenhua is also expected to reduce coal sales by 10.4% YoY to 404mt.

China’s National Development and Reform Commission has also organised three meetings so far this calendar year over restraining domestic coal supply.

“Shenhua is the first domestic producer to have announced concrete plans, but other major state-owned enterprises are now expected to follow suit,” Macquarie Wealth Management commented on Friday.

Macquarie said Chinese domestic thermal coal prices were down 6% year-to-date to 495 yuan per tonne – which is for Qinhuangdao port standard (5500kilocalories per kg) and equating to about $US79/t.

“While a unified effort by producers to stabilise prices might be effective, we don’t expect much of a positive feed-through to seaborne thermal coal, given the spate of protectionist policies China has implemented over the past six months,” Macquarie said.

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