Coal demand in China is predicted to grow steadily in the second half of 2009 on account of weather change.
The China National Coal Association (CNCA) has predicted that the coal demand in China will rise at a steady pace in the second half of 2009 due to changes in weather, as reported by China Knowledge.
In the first half of 2009, the consumption of coal by China's steel industry increased by 1.6% to 230 Million Tons against the corresponding period last year. As per the statistics released by Zhong Neng Power Industry Fuel Co., coal consumption of construction material industry rose 7.5% to 170 Million Tons and 5% to 70 Million Tons in the chemical sector.
At present, the Chinese coal market is passing through a tumultuous phase due to pressure from oversupply but the condition will improve in the second half when coal demand and supply run smoothly, said domestic coal marketing experts. They also expressed confidence that coal prices would stabilize at most places.
Since the Chinese government is giving emphasis on the development of new energy sources and their extensive use, coal industry is expected to see slow growth compared to the overall economic growth.
Despite better performance than expected by China's coal economy over the past few years, CNCA has predicted gloomy outlook for the industry and has decided that it will not adjust coal resource tax in near future.
Besides, China, the world's largest coal consumer and producer, had become the net coal importer in the initial five months of 2009 (Jan-May), with monthly imports reached the highest level of over 9 Million Tonnes in April-May 2009.
On the other side, the coal industry has been struggling to deal with rising mine accidents due to increased coal production. The incidences of fire in coal mines have escalated which are also creating problems for the industry. High pressure of reducing pollutants emitted in the environment by coal plants and technological issues like improving equipment efficiency have been obstructing the industry growth.
According to a Research Analyst at RNCOS, "Given China's economic growth rate, it is expected that the demand for coal will spiral in near future. With huge reserves of coal, the coal industry in China is poised to meet the rising demand provided it implements the efficient technology at the earliest."
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