February 22, 2016 Read More →

Citing Oversupply, Fitch Is Bearish on China Coal Sector

Julie Silvederio for SNL:

Fitch Ratings released Feb. 18 its bearish outlook of China’s coal sector, citing “losses and plunging profits” reported in 2015 by 28 of the country’s 33 listed coal companies and the unlikelihood of coal price recovery in 2016 amid a supply glut and weaker demand.

Twenty eight of the 33 coal companies listed on China’s Shanghai and Shenzhen Stock Exchanges reported an aggregate net loss of over 4 billion Chinese yuan in 2015 against 37 billion Chinese yuan of net profit in 2014, according to the ratings agency’s special report. It said the 28 coal companies “represent the strongest subset among China’s more than 6,000 coal-mining companies,” and that the rest are in worse condition.

“Twenty of the 28 companies reported a net loss in 2015, while the remaining eight saw their net income cut by between 57% and 93% from a year ago,” Fitch analysts wrote.

Fitch also indicated that only China Shenhua Energy Co. Ltd., Yanzhou Coal Mining Co. Ltd. and Shanxi Lu’an Environmental Energy Co. Ltd booked net income of over 200 million Chinese yuan among the eight companies that reported profits in 2015.

Citing oversupply of thermal coal as the major factor, Fitch forecast a difficult recovery for coal prices.

Full article ($): Fitch sees dismal year for Chinese coal amid supply glut and decreased demand


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