U.S. coal companies target the Chinese market

In recent years, haze has been hitting more and more areas in China, which is undoubtedly a bad news for local residents. However, for US coal producers, it may not be a good thing.

On the West Coast of the United States, accusations that coal is the culprit for climate change, traffic congestion, and other turmoil have buoyed the US production companies from exporting coal.

In China, where coal consumption is almost equal to the sum of coal consumed by other countries in the world, plans for clean energy are accelerating, including limiting carbon emissions and opening new coal power plants. Even if these changes cannot be achieved as quickly as environmentalists hope, China is also planning to stop construction of steel mills with huge coal consumption.

The growing sentiment of boycotting coal between China and the US is threatening the ambitions of some US coal companies such as Peabody Energy and Aceh Coal to expand their global markets. However, even if China's coal demand growth slows down, the huge economic aggregates will determine that the total coal consumption in the next few decades will still be very large, and US coal producers are eyeing potential business opportunities.

Restricted demand for coal in China China is planning to reduce its share of total energy consumption to less than 65% by 2017. After 2030, China will no longer build new coal-fired power plants. In 2050, the installed capacity of clean energy power generation in the country reached 2.48 billion kilowatts, accounting for 62% of the country's total installed capacity. More restrictions on coal use are also under discussion.

Due to the sharp increase in domestic demand and the limited supply, China has for the first time moved from a big coal exporter to a net importer of coal in 2009, and coal demand growth is only under the United Kingdom.

"The role of China as a net coal importer may be diluted in the future," said Trevor Houser, a partner at Redding Group, a New York-based international economics research firm and former US State Department consultant.

Hauser said that China's coal demand may drop sharply, especially in coastal areas where anti-pollution efforts are relatively large. If the west also adopts similar measures, coal exporters in the United States will not be able to compete with Chinese domestic competitors. China Power is shifting from the east to the western provinces.

He said: "For companies like Peabody Energy or Archie Coal, China's declining coal demand and the shift of coal demand to the western region is naturally a huge risk, but the greater risk is that both It will endanger the pricing of US coal producers in Asia. Even if your sales do not diminish, your prices must not be as high as before."

US coal companies are still betting on China However, the enthusiasm of US coal producers for the Asian market is still high. Hal Quinn, chairman and chief executive of the National Mining Association, said: "Global coal demand is expected to continue to rise, while Asia's share will increase."

Although nearly half of U.S. coal is exported to Europe and Asia only accounts for 1/4 of U.S. coal export market, Asia has become a rapidly growing market for U.S. coal producers.

At the beginning, Aceh’s coal exports were only focused on markets such as South Korea, but now they are also looking to China, which will also be the target market that they ultimately pursue.

Even if the economic growth slows down and shifts its focus to renewable energy, China will continue to be a major consumer of coal in the coming decades. China's economic aggregate is huge, which means that the economic growth slows down and it is difficult to reduce the use of electricity. According to Bloomberg's 2013 new energy finance report, by 2030, China's total electricity generation will double and the amount of coal-fired power generation will decline, but the proportion will still be as high as 58%.

The draft of China's urbanization plan also made it clear that by 2020, it will strive to achieve the goal of 100 million people in the transfer of agricultural population in urban areas. A number of new national transport corridors will form a huge transportation network together with the railways, which will promote the production of coal, steel, and electricity.

The import ratio is better than that of the mainland China Coal Industry Association vice president Liang Jiaxuan said last year that the total coal use in China was about 3.6 billion tons in 2012, and it is expected that the total national coal demand will be around 4.8 billion tons by 2020.

Although the growth rate of coal demand in China may not be as fast as the previous half, U.S. coal producers still find huge potential business opportunities.

Peabody Energy, the world's largest privately-listed coal company, received 10% of the total global market revenue from the Chinese market last year, which is at least 7 percentage points higher than it was two years ago.

Last year, Archie Coal also set up an office in Beijing. Gregory Boyce, the company's chief executive, told investors in April that rising transportation and labor costs are pushing Chinese companies to accelerate foreign coal imports.

Although China has the third largest recoverable coal reserves in the world, the transportation costs of coal from mines to industrial centers in the southeast coastal areas are very high. The consequences are clear: Many companies prefer to import coal from abroad if import prices are appropriate. Data from China Customs show that last year China imported a total of 270 million tons of coal.