Chinese Coal Industry Affected By Falling Oil Prices

December 07, 2014

China's coal companies are having a hard time selling their coal even as winter sets in. China’s National Coal Association says that’s because seven in 10 Chinese coal companies are losing money as supply far exceeds demand.

Coal producers say their main clients, namely concrete and steel factories, have already bought enough coal. Meanwhile, power companies used 15 percent less coal to generate electricity in October.

The China Electricity Council says factories have been using less electricity for production because of an economic slowdown. As a result, power companies have hit a three-year low in the amount of coal they use to generate electricity. That comes as coal companies continue to produce more coal than is needed.

Analysts say falling international oil prices are also weighing on Chinese coal chemical companies. Coal-to-liquid projects would suffer losses if international oil prices fall below 70 US dollars per barrel. The former director of the National Energy Administration Zhang Guotao says investments in coal chemicals should be cautious because the cost advantages have disappeared.

(Source: CNTV)