China: Coal Imports to Stay Steady in '14

China's imports of coal in 2014 are expected to remain at the same level as last year, with demand growth slowing and the domestic market already well-supplied, a senior energy official said on Thursday.

 

China imported 267 million tonnes of coal for the whole of 2013, up 14 percent on the year, with many buyers seeking out cheaper overseas supplies.

 

Ren Lixin, director of the coal department at the National Energy Administration (NEA), told an industry conference that oversupply also remains a problem for a sector struggling with slowing demand and a campaign by the government to switch to less polluting energies.

 

Oversupply was reflected in China's coal inventories, which have remained at around 300 million tonnes since last year, up from the traditional rate of 200 million tonnes, Ren said.

 

Tumbling prices, caused by weaker demand due to slowing growth in China and a flood of cheaper imports, have forced many smaller coal miners out of business, while a slew of majors, including Shenhua Energy , China Coal Energy and Yanzhou Coal, reported losses for their 2013 results.

 

The sector has also faced heavy pressure from a nationwide campaign to cut smog and promote cleaner energy sources like gas and renewables, but Ren suggested China's war on pollution could provide the impetus for the struggling sector to reform itself.

 

"It is important for the coal industry to transform itself by becoming clean and green in order to survive this new era," he said.

 

Ren said that China would step up efforts to consolidate the sprawling, fragmented sector this year and phase out inefficient and small-scale production. China closed 1,200 small-scale mines in 2013, but there were still around 6,300 that needed to be shut, he said.

 

The NEA announced last week that it would close 1,725 small coal mines this year, amounting to a total capacity of 117.48 million tonnes, with local governments under orders to shut all mines with annual production capacity of less than 90,000 tonnes.

 

However, China's last five-year plan for the energy sector still allows for the construction of an additional 860 million tonnes of new coal production capacity over the 2011-2015 period.

 

(Reporting by Fayen Wong; Editing by Richard Pullin)