Coal curbs may spark industry-wide losses

China’s coal industry is likely to experience continued across-the-board losses this year, as government-imposed restrictions result in price increases and squeezed profits. “It’s likely that all coal powered (electricity) companies will be in the red this year,” vice chairman of China Electricity Council Yang Kun predicted at the association’s annual forecast conference last Friday. “They may not even be able to afford coal at all.” Yang said that 2016 fourth-quarter profits of the five largest state-owned coal companies were a mere 4% of what they were in 2015. This was the culmination of a dismal year for the industry, with profits dropping 33%, 61%, 80% and 97% year-on-year, from the first to fourth quarters respectively. According to Caixin, the price for thermal coal, the raw material in power generation, surged as a result of last year’s nationwide drive to reduce overcapacity, causing a 73% price rise.