China's coal giants appear to have turned their losses into profits as the industry improved performance by cutting excess capacity, according to the National Development Commission, as well as companies' annual earnings reports.
Coal companies are improving profitability as excess capacity is cut. Coal production in China declined 9.6 percent in the first six months from the same period last year.
Shaanxi Coal Industry Co showed net income of 280 million RMB (US $ 42.2 million) in the first half of the year in its report. While China Coal Energy Co is forecasting a net profit of 520 million yuan.
By the end of July, China's coal prices were up 15.9 percent from the beginning of 2016, equivalent to an increase of 59 yuan per tonne. Deng Shun, an analyst at ICIS, a global energy consultancy, said the price of coal in China is forecast to rise in the coming months as overcapacity continues to shrink.
His view was supported by securities analyst Shenwan Hongyuan, who said in a recent report that well-managed coal companies can expect big profits. The report states that "The coal industry as a whole is modernizing with the closure of poorly performing companies."
Coal giants profit from reductions in excess capacity
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Azovpromstal® 4 August 2016 г. 11:32 |
