The Chinese New Year (CNY) holiday is seen as having only limited impact on metallurgical coal production in China, compared with past years, according to a new report published by Mysteel.
Traditionally, CNY is the time when Chinese people return home to celebrate the new year’s arrival and when workplaces are shuttered, but this year more businesses are likely to remain in operation for longer, including coal mines, the report suggests.
Following government policies aimed at encouraging employees to stay where they work rather than travel (and so reduce the risk of the resurgent coronavirus spreading widely), responses from 56 coal-mining enterprises that Mysteel surveyed nationwide indicated that this year’s holiday break will be shorter.
For 2021, the official CNY holiday lasts over February 11-17 though, and people take a few more days either side, Mysteel Global notes. But the survey found that among the mining firms, their holiday shutdowns this year will average 8.6 days, or 3-4 days shorter than in past several years.
The holiday duration remains rather flexible for Chinese companies, depending on operational demand, though the payment of subsidies to employees required to stay working during the holiday will be compulsory and is normally 2-3 times their daily wage.
Among the surveyed coal-mining enterprises, about 71% will have a break of 0-7 days and 16% for 8-14 days, while last year, some 44% broke for 0-7 days, 22% for 8-14 days and 18% for 15-21 days, according to the survey.
By ownership, state-owned coal miners will take shorter breaks this year compared with privately-owned mining companies. For example, the average CNY holiday for the 14 state-owned miners in North China Mysteel surveyed will be just 1.7 days, while that for the 23 privately-owned firms in the same region will be 7.4 days, the survey found.
In general, the average CNY break plan for North China will be 6-7 days shorter than in 2020, the findings showed. North China is the country’s core region for met coal mining and processing, particularly of premium hard coking coal, Mysteel Global noted.
The 56 surveyed coal miners boast about 534.2 million tonnes/year of raw coal capacity in total. Mysteel calculates that if that 8.6-day average break is observed this year by all Chinese met coal producers whose average raw coal production capacity is 1.2-1.3 billion tonnes/year, then that 3-4 days of reduction in the holiday stoppage could translate to an increase in coking coal run-of-mine output this year of some 13.3 million tonnes.
Similarly, assuming a coal-processing rate of 50%, then the availability of processed coking coal will surge by 6.6 million tonnes in total during the CNY break, the report noted.
The anticipated lift in coking coal output during this year’s CNY is also expected to slow the pace of de-stocking of coking coal at China’s coking plants and steel mills which, by extension, could weigh on domestic coking coal prices, Mysteel forecast.
Normally, coking coal stocks held by merchant coke producers and steelmakers decline during CNY as operations at both usually continue unaffected during the holiday while coal procurement slows, the report explained.
According to Mysteel’s latest data, on February 4 total coking coal stocks at the 230 independent coking plants sampled by Mysteel was 19.4 million tonnes. These stocks could sustain the coke makers for about 22.73 days of operation, or a record high since Mysteel began taking this survey in December 2017.
Also as of February 4, coking coal stocks at the 110 Chinese steel mills reached 8.9 million tonnes, which could sustain their production for 17.8 days, both hitting a one-year high, according to Mysteel’s data.
Source: Mysteel
Written by Sean Xie
Edited by Russ McCulloch
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