Chinese coal mines are shut by the government owing to four year low coal prices. A slight price rise seen in coal because of approaching winters comes as a ray of hope in China.
Coal prices in China are at its four year low at present. Low coal prices in China accompanied with some steps taken by Government seems to be helping clear the market. Yanzhou Mining, a China based miner, is glad with the government’s decision, as it can now easily clear its available stocks.
Chinese government till date has shut down around 1,300 small and dangerous coal mines of the country in past few years. It further plans to close another 2,000 mines by the end of 2015. The closing of coal mines along with low coal prices resulted in the decline of production year over year. However, with the approaching winters, the coal prices are gaining stability andreached 11 month high in the first week of October. This could bring some stability in the demand and supply of the fuel in the country.
Shandong-based, Yanzhou Mining will be benefitted with the stable market as it will gain easy access to several ports, railway lines and rivers. Also, as it is located in Eastern China, closer to Japan and South Korea, the main importers of coal from the Chinese market. Chinese productions were up by 7% in H1 FY14, but revenue decline 11% because of the low coal prices. Increasing coal prices will thus prove beneficial for the miner.
Chinese imports had declined slightly to 26 MnT in August, 2013 but the overall imports of the quarter were up by 18%. China still remains a huge market for Australia based miners Rio Tinto and Peabody, who are already prepared with the material for its sale and export.
China is now trying to get back its position in the global market. Yanzhou Mining on one hand is providing direct Chinese exposure. On the other hand, Rio Tinto and Peabody are helping with notable global exposure to China helping in growth and development of Chinese Economy.