• 5 hours U.S. Oil Production To Increase in November As Rig Count Falls
  • 7 hours Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 9 hours Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 11 hours EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 13 hours Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 14 hours Aramco Says No Plans To Shelve IPO
  • 3 days Trump Passes Iran Nuclear Deal Back to Congress
  • 3 days Texas Shutters More Coal-Fired Plants
  • 3 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 3 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 4 days Chevron Quits Australian Deepwater Oil Exploration
  • 4 days Europe Braces For End Of Iran Nuclear Deal
  • 4 days Renewable Energy Startup Powering Native American Protest Camp
  • 4 days Husky Energy Set To Restart Pipeline
  • 4 days Russia, Morocco Sign String Of Energy And Military Deals
  • 4 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
  • 4 days China Set To Continue Crude Oil Buying Spree, IEA Says
  • 4 days India Needs Help To Boost Oil Production
  • 4 days Shell Buys One Of Europe’s Largest EV Charging Networks
  • 5 days Oil Throwback: BP Is Bringing Back The Amoco Brand
  • 5 days Libyan Oil Output Covers 25% Of 2017 Budget Needs
  • 5 days District Judge Rules Dakota Access Can Continue Operating
  • 5 days Surprise Oil Inventory Build Shocks Markets
  • 5 days France’s Biggest Listed Bank To Stop Funding Shale, Oil Sands Projects
  • 5 days Syria’s Kurds Aim To Control Oil-Rich Areas
  • 5 days Chinese Teapots Create $5B JV To Compete With State Firms
  • 6 days Oil M&A Deals Set To Rise
  • 6 days South Sudan Tightens Oil Industry Security
  • 6 days Over 1 Million Bpd Remain Offline In Gulf Of Mexico
  • 6 days Turkmenistan To Spend $93-Billion On Oil And Gas Sector
  • 6 days Indian Hydrocarbon Projects Get $300 Billion Boost Over 10 Years
  • 6 days Record U.S. Crude Exports Squeeze North Sea Oil
  • 6 days Iraq Aims To Reopen Kirkuk-Turkey Oil Pipeline Bypassing Kurdistan
  • 6 days Supply Crunch To Lead To Oil Price Spike By 2020s, Expert Says
  • 7 days Saudi Arabia Ups November Oil Exports To 7-Million Bpd
  • 7 days Niger Delta State Looks To Break Free From Oil
  • 7 days Brazilian Conglomerate To Expand Into Renewables
  • 7 days Kurdish Independence Could Spark Civil War
  • 7 days Chevron, Total Waiting In The Wings As Shell Mulls Majnoon Exit
  • 7 days The Capital Of Coal Is Looking For Other Options

This Coal Superpower Is Making Big Cuts

This Coal Superpower Is Making Big Cuts

The best time to buy commodities is when most producers are losing money.

Such unprofitable periods reliably mark cyclical lows in metals and energy. Because when no one is breaking even, production will inevitably decline--putting supply and demand back in line. And setting the stage for a price rebound.

We're seeing this happen in a number of sectors today. Including gold and uranium.

But the most acute example is coming from one particularly commodity: coal.

And the government of the world's top coal producer, China, last week started making some big moves to fix the situation, according to Platts. Tacitly admitting that the industry is a complete bust right now in terms of profits.

The developments came from China's National Development and Reform Commission (NDRC). Who met to discuss problems facing the Chinese coal sector of late.

Following the get-together, sources on the scene reported that the NDRC is planning some policy changes. Which are likely to include major steps to get the coal business (and prices) headed back in the right direction.

One of the major shifts will reportedly be a cut in coal production from the country's largest miners. With the 14 largest firms expected to be told to curb 10% of their output.

That would be a significant figure. Amounting to a reduction of 48 million tonnes of annual supply.

Such a cut would certainly help in improving prices across the Chinese coal market. But the larger question for international investors is--what effect will it have on coal imports?

The answer isn't immediately clear. With reports suggesting that NDRC may also implement controls on imports--aimed at discouraging foreign supply coming into the country.

But such a complete ban on coal imports could run afoul of World Trade Organization rules.

Leading some analysts to suggest the Chinese government will circumvent this issue by simply banning low-quality coal imports. A measure that's been discussed for some time here.

That would be bad news for Indonesian coal exporters--who are the major supplier of lower-quality coal into China. But could be a boost for other exporters like Australia and the U.S. Who would no longer have to compete with the explosive supply growth that's come out of Indonesia the last few years.

We'll see what the final result is. In any case, it appears something has got to give in the coal space.

Here's to making things right,

Dave Forest




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News