He forecasts that China’s demand
for coal will continue to grow, quot- ing sources saying that the countries of non-OECD Asia account for 90% of the projected increase in world coal consumption from 2006 to 2030. Much of the increase in demand for energy in non-OECD Asia, particu- larly in the power and industrial sec- tors, is expected to be met by coal. With regards to China in particu-
lar, projections indicate that consump- tion of coal will nearly double in the next 20 years, and that the percentage of energy usage represented by coal in China is going to increase, says Wilmot. According to GAC’s Claus
Schensema, China is in ‘the major league’ and over the next 10-15 years will likely dominate the use of coal to produce energy. “Until its reliance on coal is dimin-
ished in favour of more sustainable energy sources such as wind, solar and the like, China is expected to continue to dominate the market and determine - if not dictate - supply and demand, which in turn affect freight rates” he said.
China’s Shanxi Province, the coun- try’s top coal producer, expects its coal output to rise by up to 30% this year to meet growing demand, said Zhang Baoshun, the Party secretary of the province. “The coal orders we have received
have exceeded 700 mt. We expect to produce 700 mt to 800 mt,” Zhang said. The figure is higher than an earlier
estimate of 600-700 mt. Shanxi pro- duced 615 mt of coal in 2009, about 20% of China’s total. It supplies al- most 50% of China’s coke. This year China is targeting national coal out- put of around 3.3 bt, a 3.3% increase, the country’s economic planning min- istry, the National Development and Reform Commission (NDRC), said in its annual economic plan. That growth rate is slower than
most analysts’ demand forecasts and the NDRC’s expectation is that elec- tricity output, most of which is coal- powered, will rise 6.6% this year.Shanxi launched a consolidation push in the coal industry last year dur- ing the economic slowdown, causing its annual coal output to fall by 5%. By the end of last year, the prov-
ince had reduced the number of coal companies from 2,200 to 130, 50% of which are shareholding companies while 20% are state-owned. Shanxi has signed 98% of acquisi-
tion contracts and more than 80% of mining licenses have changed hands, according to Xinhua news agency. But the capacity once provided by
hundreds of small miners could take as long as a year to return to produc- tion, analysts and traders said. The consolidation drive, which
aimed to close small, dangerous and inefficient mines, was a major factor in turning China into a net importer of coal last year, with a tripling of import volumes. As a result, China flipped from 5 mt of net exports in 2008 to 103 mt of net imports in 2009, with the average price being $84/ tonne.
China is keen to reduce its depend- ency on coal for power generation and is looking for hydropower, wind, nu- clear and gas to play larger roles. Cur- rently coal accounts for 70% of total primary energy consumption in China, oil 19.5%, hydropower 6%, and other combustible gases 3%. The consump- tion of solar power and nuclear power is still below 1%.
BMI March/April 2010
Other energy sources, such as nu-
clear, wind and gas are costlier than coal, but could make quicker strides if consolidation pushes up coal prices by cutting supply or raising safety standards and production costs. Because China consumes so much
coal, even a small shortfall in domes- tic supply can trigger a huge import surge. That’s what happened last year, when Shanxi shut down small and in- efficient mines, while demand from steel mills and power generators rose.
One industry to benefit from China’s increase in coal production is the manufacturing sector.
SEW-EURODRIVE—Driving the world
Japan’s Hitachi Construction Ma-
chinery, Asia’s second-largest exca- vator maker, expects sales in China to double in the first quarter of this year, beating its forecast as the nation’s spending on railways and mining fu- els demand. CEO Michijiro Kikawa said
Hitachi’s excavator sales in China, the world’s largest and fastest growing market, may surpass 3,500 units dur- ing the three months ending 31 March, compared with 1,774 a year earlier. That would exceed the 3,000 units the company projected for the period on 27 January. Hitachi sold 556 excavators in China in January, exceeding its esti-
mate of 530 units, and February sales of 679 units more than doubled the forecast of 300. March sales may reach 2,300 units, 100 more than the company’s forecast, Kikawa said. In China, about 40% of annual
sales of excavators are typically sold in the first three months after the Spring Festival holiday, according to Hitachi spokesman Shirou Ishii. The festival fell in the second half of Feb- ruary this year.
No sign of a slowdown
Demand for excavators in China may climb 20% in the year starting 1 April from a record in this current fiscal year, Kikawa said.
Heavy machinery sales in China
are being driven by the efforts to de- velop inland regions and increase coal production to meet rising demand for electricity. Hitachi’s 17% share of China’s
excavator market is the third largest after Japan’s Komatsu and South Ko- rea’s Doosan Infracore. “I expect China’s strength will
carry over into next fiscal year,” Kikawa said. “There’s no sign of a slowdown despite adjustments to monetary policy.” Hitachi and its rivals, including
Caterpillar of the US, have relied on growth in China as sales in the US, Europe and Japan plummeted
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