Coal news and updates

China demand for coal-fired electricity falls by 10 per cent in March quarter

China's consumption of electricity from coal-fired power stations fell 10 per cent over the first three months of the year, as overall electricity usage posted one of its weakest performances in two decades.

The National Energy Administration said on Thursday, China's power consumption fell 2.2 per cent in March compared with a year earlier, as the economy slowed and heavy industry cut back production.

Over the quarter, power consumption was up just 0.8 per cent compared with last year, well below market expectations.

"This is one of the lowest rates of quarterly growth in the last two decades," said Lin Boqing, director of the China Centre for Energy Economics Research at Xiamen University.

"It shows there is very large downward pressure on the economy, especially heavy industry." 
'Bad news' for Australian exporters

Mr Lin said the figures were "very bad news" for Australian coal exporters, as it signalled Chinese demand would continue to decline.

China's coal imports fell 42 per cent over the first quarter of the year, compared with the same time last year, according to Customs Bureau figures released on April 13.

This is partly a function of Beijing's recently declared "war on pollution" but also overproduction across the Chinese coal sector.

While coal used in the power generation saw a sharp drop in the first quarter, the use of renewables rose sharply.

The consumption of hydro electricity rose by 10 per cent over the quarter, compared with the same time last year. Hydro power is now 55 per cent as large as coal, after contributing 609 hours of electricity consumption in the first quarter.

Mr Lin said China's tough new environmental restrictions had played some part in the weak power consumption numbers, but the main problem was a lack of demand from heavy industry.
Weak data

On Wednesday, China reported its first drop in crude steel and pig iron production on record, among a slew of weak data connected to heavy industry and the housing sector.

Crude steel production dropped 1.7 per cent over the quarter, its first decline since records began in 1994.

Cement production in March was down 20.5 per cent, compared with last year, while the amount of glass produced fell 6.6 per cent.

The drop in power usage in March combined with the weak production figures for steel and cement will raise suspicions that China's economy is growing at a far slower pace than official figures suggest.

On Wednesday, China reported first-quarter growth of 7 per cent, the slowest expansion in six years.

Premier Li Keqiang fuelled doubts over the accuracy of China's economic data in 2010, when WikiLeaks revealed he said the GDP figures were for "reference only" as they were "man made".
Li Keqiang Index

He cited power consumption, rail freight volumes and bank loans as a better gauge of China's economic health.

This spawned the so-called "Li Keqiang Index".

Using these metrics, Bloomberg calculated China's economy grew at about 5 per cent in the first quarter, after rail volumes declined 9 per cent and growth in money supply or M2 fell slightly to 11.6 per cent.

While this index was popular with economists when Mr Li's comments came to light in 2010, it has fallen out of fashion in recent years as the importance of heavy industry declined and consumption played a greater role in the economy.

source: http://www.afr.com