China to further cut steel, coal capacity in 2018: Li Keqiang

Posted on 06 March 2018

Source: Hellenic Shipping News

China is looking to cut ineffective steel capacity by 30 million mt and coal capacity by 150 million mt in 2018, China’s Premier Li Keqiang said during the annual Chinese People’s Political Consultative Conference and National People’s Congress meeting Monday.

China had reduced about 0.25 billon mt of coal capacity in 2016 and 0.15 billion mt in 2017.

China has been structurally reforming its supply side with an aim to reduce overcapacity in coal and steel industries as well as battle rising pollution levels.

Given the closure of smaller and inefficient mines as well as policy changes on production, Chinese domestic thermal coal price has risen significantly since second-half of 2016, with the price of 5,500 kcal/kg NAR jumping to a two-year high of about Yuan 770/mt FOB Qinhuangdao in early 2017, from Yuan 365/mt in early 2016, S&P Global Platts data showed.

Seaborne coal market also followed suit, with Newcastle 5,500 kcal/kg NAR with typical 20% ash more than double from around $40/mt FOB in early 2016 to about $90/mt early this year.

Keqiang also said that coal-fired power generation units with a capacity of less than 300,000 kW that fail to meet desired standards would also be closed this year.

This is in line with the central government’s 2015 decision to construct ultra-low emissions power generation units in China before 2020. 

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