China’s listed coal companies have successively released their financial reports for the first half of this year, showing varying degrees of decline in profits, with the most significant decline reaching one-third.
On August 31st, China’s largest listed coal company, China Shenhua, released its 2024 interim report. The report showed that from January to June this year, the company achieved a revenue of 168.078 billion yuan (RMB), a year-on-year decrease of 0.8%, and a net profit attributable to the parent company of 29.504 billion yuan, a year-on-year decrease of 11.34%.
On the same day, Yanzhou Coal Mining’s performance report revealed that the company’s revenue for the first half of the year was 72.312 billion yuan, a year-on-year decrease of 24.1%; the net profit attributable to the parent company was 7.568 billion yuan, a year-on-year decrease of 31.64%.
In addition, China Coal Energy reported a revenue of 92.984 billion yuan for the first half of the year, a year-on-year decrease of 14.97%; and a net profit attributable to the parent company of 9.788 billion yuan, a year-on-year decrease of 17.3%. Shaanxi Coal Industry recorded a revenue of 84.74 billion yuan in the first half of the year, a decrease of 6.5% from the same period last year, with a net profit attributable to the parent company of 10.56 billion yuan, a decrease of 8.8%.
A Financial News analysis on August 31st indicated that the collective decline in profits of coal companies was due to the decline in coal prices. As of the end of June this year, the spot trading price of 5500 kcal power coal in Qinhuangdao was 874 yuan per ton, a decrease of about 9% from the average price in 2023. Yanzhou Coal Energy’s average selling price in the first half of the year was 697 yuan per ton, a decrease of over 20% compared to the same period last year when it was 912 yuan per ton.
The reason for the decline in coal prices was attributed to lower-than-expected coal consumption demand. In the first half of the year, the consumption of commercial coal decreased by about 1.4% compared to the same period last year. China Shenhua stated that the group’s coal sales volume achieved a year-on-year increase of 5.4% in the first half of the year. However, the average selling price of coal decreased by 5.8%.
At the same time, due to the decline in coal prices and safety inspections, China’s coal production decreased by 1.7% in the first half of the year, amounting to 2.27 billion tons.
While China’s coal production declined, coal imports hit a new high. In the first half of the year, China imported a total of 250 million tons of coal, a 12.5% increase compared to the previous year. The China Coal Industry Association believes that the continuous increase in coal imports in the first half of the year has had a significant impact on the coastal coal market and created pressure on domestic trade. However, effective demand in China remains insufficient, leading to difficulties for downstream coal industry enterprises in the past two years.
The China Coal Industry Association predicts that the demand for thermal coal in China is expected to continue growing year-on-year in the second half of the year. The low operation of the real estate industry may continue to affect major construction material production, coupled with the accelerated promotion of energy conservation and carbon reduction in key areas. This could lead to relatively weak coal demand in the steel and construction materials industries, putting downward pressure on the coal market prices.