China’s largest coal company, Shenhua, has announced a 42.5% fall in profits for 1H15, according to its interim results filed with the Hong Kong Stock Exchange. Profits dropped from RMB22.78 billion (US$3.56 billion) in 1H14 to RMB13.07 billion (US$2.04 billion).
Revenues were down 32.1% from RMB129.20 billion (US$20.18 billion) to RMB87.78 billion (US$13.73 billion).
“Affected by insufficient market demand and oversupply, spot prices of coal continued to slide and the loss suffered by China’s coal industry continued to widen,” said Zhang Yuzhou, Chairman of Shenhua.
At the end of June, the average prices of the Bohai-Rim Thermal Coal Price Index (5500 kcal/kg) fell to RMB418/t (US$65.3/t), down 20.4% from RMB525/t (US$82.02) at the beginning of the year.
The company also expects overcapacity to persist through 2H15, despite cuts to production and an increase in demand. Coal imports are forecast to remain “at a considerable levels in the second half of the year [due to] the continuous demand for imported coal in the coastal areas in China and the competitive coal prices offered by Indonesia and other major exporters,” the company said. However, total imports will be below last year’s levels.
Edited by Jonathan Rowland.
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