China's Coking Coal Market Predicted to Remain Stable in 2012

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Researched by Industrial Info Resources China (Beijing, China)--China's coking coal market is expected to experience weak demand with a relatively fast growth in supply. The market for coking coal is expected to maintain an overall balance in 2012, provided that there is no large-scale investment-stimulation policy issued during the year. The forecast was issued by China Coal Daily on March 20.

In 2011, China's consumption of coking coal reached about 593 million metric tons, an increase of 7.8% year over year. However, the growth rate is 1.9 percentage points lower than the previous year. According to calculations, the output of coking coal in China reached 558 million metric tons in 2011, an increase of 10.1% year over year, which was 3.7 percentage points higher than the previous year.

Due to the impact of the market situation and government trade policies, China's coking coal imports experienced rapid growth in 2009 and 2010. In 2011, China's coking coal import reached 44.66 million metric tons, a decline of 5.5% from 2010. Exports in 2011 reached 3.59 million metric tons, an increase of 215.6% year over year.

Based on the long-term tracking of the stockpiles of coking coal for 32 major steelmakers in China, the relationship between supply and demand of coking coal seems to be maintaining normal, balanced levels.

The industrial chain of coking coal is mainly driven by investment. As the growth for most of the steels sector's downstream markets, including real estate, raw materials and heavy industries, are slowing, there is little optimism about growth in China's coking coal market in 2012.

On the supply side, the output growth in Anhui, Henan, Hebei, Guizhou, West Inner Mongolia and Heilongjiang will be limited. A major factor will be the gradually accelerated release of coking coal production capacity from the producers that participated in the merging and reorganization carried out in Shanxi in 2009. As 6,366 kilometers of new railways begin operating in 2012, the transportation condition for coking coal will be improved.

Globally, the demand for coking coal will slow. As the largest coking coal exporter in the world, Australia's coking coal production capacity increased by about 18 million metric tons in 2011, with another 13.5 million metric tons to be added in 2012. The abundance of coking coal will keep prices at low levels. In addition, following the commissioning of coal mines by Chinese and transnational enterprises in Mongolia, the import of coking coal from Mongolia will continue growing.

In summary, the increase in supplies of coking coal will surpass demand growth in 2012. However, as the growth in quality coking coal will be limited, the market will maintain an overall balance, but the surplus of coking coal will to continue to increase.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.