Sxcoal Issue 33# | How China's coal production capacity changes this yr, and 2025?
Discover the shifts in China's coal production capacity and what they mean for the future.
China's coal production capacity is experiencing significant changes, primarily due to an oversupply that has led to declining coal prices, particularly in the thermal coal sector.
The oversupply is largely a result of high domestic production and substantial imports, with imports projected to exceed 500 million tonnes.
In the first three quarters of 2024, the effective supply (domestic supply+net import) of thermal and coking coal reached nearly 3.6 billion tonnes in China, surpassing total demand of about 3.5 billion tonnes.
From January to September 2024, China added coal capacity of 27 Mtpa through expansion and commissioned 24 Mtpa of new capacity, resulting in a total increase of 51 Mtpa, with 39 Mtpa attributed to thermal coal.
Despite lower-than-expected additions, coal prices have continued to decline, and analysts are predicting a bearish market outlook for 2025, with expectations of lower average price levels.
The National Development and Reform Commission (NDRC) has issued new guidelines that suggest a potential easing of market supply for thermal coal contracts in 2025. As economic growth slows and coal consumption approaches its peak, demand is expected to stabilize within a narrow range.
Capacity additions in 2025 are anticipated to exceed 100 Mtpa, marking a 38% year-on-year increase, although the number of new coal mine approvals has decreased significantly since 2023, focusing mainly on replacing existing capacity.
While new mines approved between 2020 and 2022 are beginning to produce, some mines under construction are also expected to start operations soon, contributing to overall supply.
However, this expansion is somewhat counterbalanced by the phase-out of smaller and disaster-prone mines, with approximately 30 Mtpa of capacity expected to be eliminated in 2024 and under 25 Mtpa in 2025.
Overall, the net increase in coal capacity for 2025 is projected to surpass that of 2024, which aligns with the NDRC's new guidelines aimed at managing coal supply effectively.
Our new annual report "2024 China Coal Capacity Analysis and 2025-2029 Forecast" provides a detailed analysis of recent policies impacting China's coal industry. These policies include accelerated commissioning of under-construction mines, restrictions on new mines with low capacity or deep mining depths, and the implementation of a coal capacity reserve system.
Order your copy today and enjoy at HERE.