China grows to become important player in global coal market<\/p>\n
Cindy Sui, Agence France-Presse, Taiyuan, China<\/p>\n
China, the world's biggest coal producer, is beginning to
\nwield its influence as a major coal-exporter to secure a dominant
\nposition in the sector and dictate world prices, industry sources
\nsaid.<\/p>\n
The recent row between China and the European Union over
\nChinese restrictions on exports of coke -- a coal product crucial
\nfor making steel -- underscores the clout China has gained in a
\nmatter of years and the world's increasing reliance on its coal,
\nexperts said.<\/p>\n
By cutting exports this year, China drove up prices, putting
\nEuropean and Japanese steel makers dependent on Chinese coal in a
\nserious predicament.<\/p>\n
The issue was resolved on Friday with Beijing agreeing to keep
\ncoke exports to Europe at no less than last year's level, but
\nexperts said the coke industry serves as a good example of how
\nmuch influence China has gained in the market.<\/p>\n
\"They pretty much dominate the market because of their cost of
\nproduction, which no one can even come close to,\" said Michael
\nDeVisser, manager of Asset Protection Trust Ltd., a Switzerland-
\nbased company which represents a consortium of top European steel
\nmanufacturers.<\/p>\n
China began exporting coke in large amounts in 1993 after
\nimproving quality. By 2001, it had become the largest global coke
\nexporter, now accounting for 60 percent of world trade.<\/p>\n
The United States and countries in Europe shut their cokeries
\nabout five years ago and began buying Chinese coke when its
\nproduction costs fell far below that of their coke.<\/p>\n
\"They have the best coal deposits for making coke. In
\nconjunction with the cheapest labor, they have the cheapest
\ncoke,\" DeVisser said.<\/p>\n
Environmental concerns were also a factor.<\/p>\n
\"Making coke creates a lot of pollution. European countries
\nwant blue skies, so they look to China,\" said Chen Xingdong,
\nchief China economist for BNP Paribas Peregrine.<\/p>\n
This year, China began capping coal export quotas because it
\nsaid it wanted to preserve supplies for its booming steel and
\npower industries. That reduced global supplies and prices
\nskyrocketed to US$450 a ton from just over $100 last year.<\/p>\n
Industry experts said the case highlights the increased
\nleverage China has in global trade.<\/p>\n
Coke is a small part of bilateral trade, but a crucial
\ncommodity. China likely wanted to pressure Europe to grant it
\nmarket economy status, which it had been long seeking as a
\ndefense against dumping allegations, Chen said.<\/p>\n
DeVisser said China could be manipulating World Trade
\nOrganization (WTO) rules, which allow export restrictions if
\nthere is a domestic shortage.<\/p>\n
\"China knows if it restricts exports, the prices will go up,\"
\nDeVisser said. \"My impression is they did have enough coke.\"<\/p>\n
Unless China, which joined the global trade body in 2001,
\nfully commits to following WTO policies and follows market rules,
\nbuyers fear they will be at the mercy of its whims again.<\/p>\n
\"That'll be fine so far this year, but next year, they will
\nmake another move,\" DeVisser said. \"We've seen what it's done in
\nthe last eight months -- the price of these materials can just
\nfluctuate at anytime.\"<\/p>\n
But China's huge appetite as the world's biggest coal consumer
\nis leading to genuine fears of a shortage for the domestic
\nmarket.<\/p>\n
The country depends on coal for 75 percent of its energy and
\nneeds coal to make steel for its booming construction industry.<\/p>\n
Increased mining, however, is raising worries of a rapid
\ndepletion in supplies.<\/p>\n
In response, China has begun reducing exports in recent years.<\/p>\n
China last year produced 1.7 billion tons of coal and exported
\njust 93 million tons, or around five percent, even though it is
\none of the top two coal exporters in the world. Production
\nincreased 54 percent from 1999 to 2003.<\/p>\n
It is the number one coke exporter, but the 14 million tons it
\nsold last year comprised just seven percent of its production.<\/p>\n
Fear of diminishing supplies appears to be one of the last
\nthings on the minds of mine bosses. With high demand, they are
\neager to rake in profits.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/china-grows-to-become-important-player-in-global-coal-market-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}