China coal mine firms see sales in 2012 flat or falling
Falling prices means less third-party buying for China Shenhua and Yanzhou Coal
Mining majors China Shenhua Energy and Yanzhou Coal Mining are looking at flat or declining sales volumes this year, as falling coal prices see them cut procurement from third parties to make room for sales from their own mines.
China Shenhua said it aimed to sell 464.6 million tonnes of coal this year, the same as last year. Marketable coal output was planned to grow 3.6 per cent to 315 million tonnes. Its procurement of third-party coal will fall 6.8 per cent to 149.6 million tonnes.
Yanzhou Coal is targeting sales of 89.9 million tonnes, 4.6 per cent less than last year, while the target for marketable coal output is a rise of 5 per cent to 64.85 million tonnes. This implies a 22.9 per cent drop in third-party purchases to 25 million tonnes, after a 50 per cent jump last year. The company's chairman, Li Weimin, said: "We raised third-party purchases a lot last year to grab market share, and to prepare for substantial output ramp-up at our own mines. The lower purchase volume this year is based on market conditions
Mainland coal prices at the port of Qinhuangdao port dropped 22 per cent over the course of last year as coal production rose. This coincided with flat coal-fired power output, because of a marked slow-down in demand from the industrial sector and a sharp rise in hydro power output thanks to high rainfall.
Yanzhou Coal's president, Zhang Yingmin, said he expected this year's average coal price to be lower than last year's. Listed power generators last week projected a 5 per cent fall.
China Shenhua's chairman, Zhang Xiwu, said that to offset the impact from a weaker coal price, the company was seeking to keep this year's rise in production costs to less than 10 per cent, after a 9.7 per cent increase last year.
