Market
Shanxi likely to buy more Mongolian coking coal
2017-11-16
The Mongolian Mining Journal /2017.Sep/
B.Tugsbilegt
Shanxi province in Central China has 55 percent of the total coking coal reserves in the country and produces 40.74 percent of the country’s coking coal -- the raw material to produce coke – but even then it now looks set to become a major purchaser of Mongolian coking coal, as Shanxi’s coking industry is being expanded in a way. The production capacity of the province’s coking coal mines has been increased by 104.45 million tonnes between 2014 and now, and is projected to go up another 97.15 million tonnes in the next three years, according to Zhang Gangfeng, General Secretary of the Shanxi Province Coking Industry Association. At the same time Shanxi’s coke producing capacity reached 127 million tonnes last year, giving it a 28.3 percent share of the total capacity in the country. The province actually produced 82 million tonnes of coke in 2016 and this is expected to reach 100 million tonnes this year. Capacity is to be increased by 80 million tonnes in the next five years to 200 million tones, giving the province 35.5 percent of the country’s total coke production capacity.
At the same time several other regions of China, such as the provinces of Hebei, Shandong, Anhui, Guizhou, Yunnan, and Heilonjiang have together slashed their coking coal production capacity by 7% or 84.77 million tonnes since 2014. The national coking coal extraction capacity is proposed to be reduced by 206.7 million tonnes or 16.7 percent of total capacity. This, too, was revealed by Zhang Gangfeng at Coal Mongolia 2017.
This has to be seen together with the fact that 19 coking companies in Beijing, Tianjin, Hebei, and Shandong – all in the Chinese eastern region -- with total production capacity of 27.65 million tonnes have closed in recent years. More such plants are likely to face closure as the government enforces its stringent environment protection policy.
All this together has led to the situation where Shanxi becomes a major buyer of Mongolian coal. The companies there prefer to mix Mongolian coking coal with their own to get the best results. For example, coking coal from Ceke port could be blended with the high-ash coal of Shanxi while the low-sulphur coking coal from Gantsmod could be mixed with the local high-sulphur coal.
China imported 42 million tonnes of coking coal in the first seven months of the year, 32 percent more than in the same period last year, and most of it was from Mongolia. The full year’s total coking coal import is expected to reach 66 million tonnes, 10 percent higher YoY, according to Fenwei Energy Information Service, which is China’s major coal database. The second half of the year will, however, see imports slowing down, the database warned.
Both coking coal extraction and steel production in China are expected to increase, even if slightly, in 2017. Steel production is projected to reach 825 million tonnes, a 2.1 percent increase YoY, while coking coal extraction will go up to 474 million tones, a rise of 6.7 percent YoY. As for coke production, it may reach 456 million tonnes, 1.6 percent up YoY.
All this bodes well for Mongolia’s coal export.
Mongolian coal not singled out
On the sidelines of Coal Mongolia 2017, B.Tugsbilegt asked Sarah Liu, Deputy President, Fenwei Energy Information Services, about the chances of Mongolian coal exports taking a hit in the coming months.
What real effect will the restrictions at the northern ports have?
They are a kind of import control measures. The Chinese Government wants to keep imports in check in order to support domestic coal producers. It is not that Mongolian coking coal is specifically targeted. The government policy applies to seaborne imports also. The recent reports of coal trucks from Mongolia taking longer to cross the border are not clear, so we do not know what the future holds.
What about control of coal quality?
These measures were actually taken up in 2014 but are being more strictly applied now. Again, these affect all imports as well as domestically produced coal, and are not in any way targeted at Mongolian coal alone. The Chinese government is committed to protection of the environment and as such has set standards to regulate the quality of all commercial coal burnt in the country, wherever it may come from.